Heritage Grocers Ordered to Pay $10M for Breach of Contract
[UPDATED: May 28]
The shipping arm of the El Rancho Supermercado chain, which operates under the corporate name of Mexico Foods, was found guilty of breaching its contractual agreements and promises with Skyward Transportation. A Dallas County jury in Texas returned a $10 million verdict last week against the grocery store ownership.
According to court documents, Dallas-based Skyward, founded by Curtis Lawrence when he was 19 years old, managed the majority of grocery delivery and backhaul services for the chain for more than a decade and enjoyed a mutually positive relationship until the acquisition of El Rancho in June 2023 by Heritage Grocers Group (HGG), a portfolio company of private-equity firm Apollo Global Management.
Shortly following that sale to HGG, the largest Hispanic and ethnic food retailer in the country, Skyward said it began receiving what the company believed to be a series of falsified records and fabricated complaints, while unpaid invoices began totaling hundreds of thousands of dollars.
However, El Rancho Supermercado says Skyward Transportation was the one that made repeated failures to meet agreed-upon service requirements. As a result, El Rancho Supermercado terminated its contract with Skyward Transportation in 2023.
According to a source familiar with the case, Mexico Foods believes Skyward Transportation was in breach of contract for failure to:
- Make timely deliveries;
- Maintain delivery vehicles in proper conditions;
- Ensure proper food safety practices, including temperature control;
- Provide proper documentation;
- Properly secure loads for transportation;
- Secure enough equipment to fulfill its contractual obligations.
The jury found that Skyward materially failed to comply with the Mexico Foods Contract first.
While the jury awarded Skyward almost $10 million in damages – that was a small fraction of its original $53.3 million in damages.
Progressive Grocer received the following statement from a spokesperson for Mexico Foods and Conecta Logistics (an internal transportation company), "Our commitment to ensuring excellence across every aspect of our supply chain remains unchanged. We are focused on maintaining the highest standards across our supply chain and working with vendor partners who are aligned with our safety and service expectations.”
The almost $10 million verdict does not include attorney fees, which include representation from Lynn Pinker Hurst & Schwegmann LLP and the Farmer Law Group, and interest to be awarded to Skyward at a later date.
Meanwhile, last month, HGG appointed Frank Ingraffia to the role of chief transformation officer (CTO). Ingraffia, who is CEO of the Chicago-based Tony’s Fresh Market chain, assumes the CTO role in addition to his current duties, dividing his time among the company’s offices in Chicago; Ontario, Calif.; and Dallas. He will report directly to HGG Chairman and CEO Suzy Monford.
Progressive Grocer will welcome Monford to the GroceryTech stage next month in Dallas. She will lead the “How to Use AI to Generate Business Value” session on Tuesday, June 10. GroceryTech is the only event that gathers grocery retail’s top leaders and innovators to help transform how the industry approaches digital modernization and growth.
Based in Ontario, Calif., HGG operates in six states – California, Texas, Nevada, Arizona, Kansas and Illinois – with a total of 58 stores under the Cardenas Markets banner, almost 30 stores under the El Rancho Supermercado banner, 21 stores under the Tony’s Fresh Market banner and seven stores under the Los Altos Ranch Market banner. The company is No. 75 on The PG 100, Progressive Grocer’s 2025 list of the top food and consumables retailers in North America.
