No wonder so many small grocers are selling out to private-equity firms. Belle Foods, a 57-store Alabama-based grocery chain, filed for Chapter 11 bankruptcy on Monday (July 1) after only about a year in business, Supermarket News reported.
The Belle chain was assembled in 2012 largely from stores that had been part of the Bruno's chain in Alabama, Florida, Georgia and Mississippi. That chain, in turn, had been through bankruptcy twice before and had been passed from hand to hand by KKR, Ahold, Bi-Lo, Lone Star Funds and Southern Family Markets after it was taken private in 1995.
According to bankruptcy court documents, Belle owes Southern Family and its parent C&S Wholesale Grocers about $34 million, and owes another $8 million to suppliers and other trade creditors.
The father-and-son team who launched Belle last year, Bill and Jeff White, had managed to juggle financing, remodel stores and placate unions. By all appearances, they just ran out of money, after first shifting some 300 full-time associates to part-time in March. Belle CEO Bill White cited increasing competition from newer stores and a spending downturn by customers due to increased payroll taxes as reasons for the bankruptcy.
Maybe Belle timed the recovery wrong, or underestimated the costs of running the chain, or just had bad luck. But what's striking is the list of major players with more money, a history of better timing, and luck that was just as bad: Being owned by two big grocery chains (Ahold and Bi-Lo) and two private-equity firms (KKR and Lone Star) resulted in two bankruptcies before Belle's owners even reopened their first store.
When big chains and private-equity guys can't do any better in small-chain grocery than a family business, maybe it really is time to take the money and run.
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