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HomeMy WebLinkAbout2014 05-06 Twelve Twin Cities Rainbows to become Cub, Byerly's stores PIONEER PRESS Twin Cities Rainbows to become Cub, Byerly's stores - TwinCities.com Page 1 of 3 12 Twin Cities Rainbows to become Cub, Byerly's stores By Tom Webb and Joseph Lindberg pioneerpress.com TwinCities.com-Pioneer Press MAY - 8 2014 Posted:Tue May 06 23:01:00 MDT 2014 TwinCities.com Supervalu and four partners are buying 18 Rainbow grocery stores in Minnesota, rebranding some as Cub Foods stores, some as Byerly's, and keeping others as Rainbow. The deal scrambles the Twin Cities grocery marketplace, and means Rainbow's corporate parent, Milwaukee-based Roundy's, is dismantling the familiar Rainbow chain and will exit the competitive Twin Cities market. The familiar Rainbow name will stay -- for now. When the complex deal is complete, 10 of the current Rainbow stores will become Cub Foods locations. Six will continue to operate as Rainbow stores. And two more, including the store in Woodbury, will become Byerly's locations. As for Rainbow employees, some won't automatically have jobs after the sale. At the 10 stores Supervalu is acquiring, "We're asking all employees, if they're interested and excited and passionate about working for us, we're asking them to apply," Supervalu spokesman Jeff Swanson said Wednesday. The $65 million deal will leave Roundy's with just nine remaining stores in its current fleet of 27 locations. Those nine sites are now in flux, as it "expects to either close or sell those remaining stores and fully exit the Minneapolis/St. Paul market," Roundy's said Wednesday. "The folks who are in the stores that haven't been purchased are filled with anxiety," said Don Seaquist, president of United Food and Commercial Workers Local 1189. But more broadly, Seaquist is positive about the change. "These are community-owned supermarkets that will remain so, so I think that's good," he said. "These are employers committed to the Twin Cities, these are employers who offer good jobs, good wages." Roundy's has been trying to sell its Rainbow chain for years but was unable to do so at what it deemed an acceptable price. "Roundy's was just watching its market share plummet up there," said Milwaukee supermarket analyst David Livingston. "For years, they were No. 2 in the market -- then Target comes in, and Lunds-Byerly's expands, then you've got Walmart coming in. So they're basically being pushed out. "This has been in the works for like seven years, off and on," Livingston added. "It's so piecemeal because that's the only way they could do it." The 10 new Cub stores will be: -- St. Paul, 892 Arcade Street -- Eagan -- Lakeville Twin Cities Rainbows to become Cub, Byerly's stores - TwinCities.com Page 2 of 3 -- Oakdale -- Roseville, including stand-alone liquor store -- Minneapolis, Lagoon Avenue and Quarry locations -- Plymouth, Sixth Avenue location -- Chaska -- St. Louis Park The two becoming Byerly's stores are: -- Woodbury, including stand-alone liquor store -- Eden Prairie The six stores sold that will remain as Rainbow: -- St. Paul Midway -- West St. Paul -- Maplewood -- Minneapolis, Lake Street -- Plymouth, at Plymouth Station -- Richfield The nine Rainbow stores NOT part of the deal, which will either be sold later or closed: -- Apple Valley -- Blaine -- Bloomington -- Coon Rapids -- Cottage Grove -- Inver Grove Heights -- Maple Grove -- Savage -- Shoreview Twin Cities Rainbows to become Cub,Byerly's stores-TwinCities.com Page 3 of 3 Eden Prairie-based Supervalu,which owns Cub Foods,is entering into the deal with Jerry's Enterprises, Haug Enterprises, Lund Food Holdings and Radermacher Enterprises. "Supervalu is thrilled to participate in this consortium of retailers that is acquiring Rainbow stores," Sam Duncan,Supervalu's CEO,said in a statement. Swanson,the Supervalu spokesman,said the deal was reached on a store-by-store basis. For instance,the St.Paul Midway area has a Cub Foods and a Rainbow Foods store close by,in adjacent shopping centers along University Avenue. If the deal goes through--in an estimated 60 days--both St. Paul stores will be owned by Supervalu. But they'll continue to have different names.One will remain Cub Foods,one will remain as Rainbow. "We looked at what's right for the community,"Swanson said."Obviously,it makes sense not to have Cub Foods on top of each other." Roundy's CEO Robert Mariano cited the recession and increased competition for Rainbow's struggles in the Twin Cities. "We believe the sale of these Rainbow stores to this group of local operators will provide those stores better stewardship in serving their communities in the Minneapolis/St. Paul market going forward." "The big picture is,the number of stores is really not changing in the market,of course,"said Livingston,the supermarket analyst."Roundy's is losing stores,some are staying open,but you're getting new stores--Whole Foods is opening,you're getting Hy-Vee coming in,so the market is staying balanced." Rainbow,which is owned by Wisconsin-based Roundy's,has closed five Twin Cities stores in the past 16 months. Now under new leadership,Supervalu is about half the size it was a year ago,when it sold off many of its distant supermarket chains in a bid to restructure and remain solvent. The company has three primary divisions:its remaining supermarket chains including Cub Foods in the Twin Cities;a food distribution business that serves both its own stores and outside independent grocers;and its no-frills Save-A-Lot division. Roundy's operates 169 retail grocery stores and 114 pharmacies, under the Pick'n Save, Rainbow,Copps,Metro Market and Mariano's banners in Wisconsin, Minnesota and Illinois. Cub Foods,based in Stillwater,was established in 1968 as one of the nation's first discount grocery stores.Cub Foods was purchased in 1980 by Supervalu and currently operates 67 corporately owned and franchised stores in Minnesota and Illinois. Tom Webb can be reached at 651-228-5428.Follow him at twitter.com/TomWebbMN.