As Roundy's Inc. continues to invest in its Chicago-area expansion with its popular flourishing Mariano's banner, the Milwaukee-based grocer is retreating from Minnesota's Twin Cities, where its Rainbow supermarkets have been in decline.
Roundy's is selling 18 Rainbow stores to a group of Twin Cities retailers, including Minneapolis-based companies Supervalu Inc. and Lund Food Holdings, in a $65 million transaction, plus related inventory. Roundy's is further actively seeking buyers for nine remaining Rainbow stores to complete its exit from the Twin Cities market. The deal is expected to close by summer's end.
“The economic downturn over the last few years, coupled with an increased competitive footprint in the Minneapolis/St. Paul Market, has made it difficult for Roundy’s to keep the Rainbow banner competitive," said Robert Mariano, Roundy’s chairman, president and CEO. "However, 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 transaction will also allow us to better focus strategically on growing our Mariano’s banner in the Chicago market and strengthening our business in our core Wisconsin markets.”
Lunds Continues Growth
Lund, which operates 12 Lunds and 11 Byerly's stores in the Twin Cities area, has been adding stores over the past several years, and expects to open a new market in downtown St. Paul next week. Meanwhile, Iowa-based Hy-Vee recently announced plans to enter the Minneapolis/St. Paul market.
Lund expects to complete its acquisition of three Rainbow stores - in Woodbury, Eden Prairie and Plymouth - within the next 60 to 90 days. The Woodbury and Eden Prairie stores will be converted to Byerly's stores, with extensive remodels planned for next year, while the Plymouth location will continue to be operated as a Rainbow for the foreseeable future. All 250 current employees at these locations will have the opportunity to continue working under the new ownership. The Woodbury site includes an adjacent liquor store, while Eden Prairie includes an in-store pharmacy.
“We’re committed to growth and development for the benefit of our team and customers in the communities we’ll be serving,” said Tres Lund, president and CEO of Lund Food Holdings, which is celebrating its 75th anniversary this year. “We’re deeply excited to have the opportunity to bring our brand of quality, service and expertise to these communities.”
Cub, Indies Pick Up Stores
In addition to the Lund purchase, Supervalu and independent grocers Jerry's Enterprises, Haug Enterprises and Radermacher Enterprises are acquiring 15 other Rainbow stores, which include 12 pharmacies and two liquor stores.
“Supervalu is thrilled to participate in this consortium of retailers that is acquiring Rainbow stores,” said Sam Duncan, Supervalu’s president and CEO. “We’re especially pleased that highly respected independent retailers here in the Twin Cities are also acquiring Rainbow stores. These independent retailers are great customers to Supervalu who understand the importance of being a strong community grocer.”
Ten of the stores will be operated under the Cub Foods banner, while five others will continue under the Rainbow name. Following the close of the transactions, Cub Foods will total 66 stores in the Twin Cities and 77 stores banner-wide (including 76 stores in Minnesota and one store in Illinois). As part of acquiring these stores and with seasonal employment needs, Cub expects to make more than 1,000 job offers in the coming months.
“For nearly five decades, Cub Foods has been a trusted grocer and innovator in the Twin Cities,” said Mike Stigers, Cub Foods president. “This community has always been important to us and it is our continued desire to deliver great products, excellent service and an incredible overall value in the grocery store. With more stores under the Cub Foods brand and being serviced out of our distribution center in Hopkins, we will be better positioned to improve our efficiencies and explore ways to bring even stronger value and price competitiveness to our shoppers going forward.”
Supervalu operates a network of 3,339 stores composed of 1,819 independent stores serviced primarily by the company’s food distribution business, 1,330 Save-A-Lot stores, of which 948 are operated by licensee owners; and 190 traditional retail grocery stores.