MIAMISBURG, Ohio -- Events four years apart in cities 900 miles away from each other may have sealed the fate of Super Food Services here as one of the casualties in the wholesale industry's ongoing consolidation.
It took Super Food three years to recover financially from the Albertson's situation, and trade observers said the possible loss of Thriftway may have been too much for the wholesaler to bear. Albertson's had been a Super Food customer in Florida for 18 years, accounting for 85% of the wholesaler's Florida sales and 34% of the company's total sales in 1991, or approximately $620 million.
In February 1992, the two companies signed a contract under which Albertson's agreed to take over the leases on Super Food's Florida assets at a price estimated at $70 million to $80 million, with Super Food agreeing to operate the facilities exclusively for Albertson's. The agreement also called for Super Food to terminate its existing collective bargaining agreement with Teamsters Local 385.
However, union members at the two warehouses rejected two successive contract offers from Albertson's, prompting the retailer to break off negotiations with Super Food. Although the union ultimately accepted Albertson's offer on a third vote, the retailer had already signed an interim supply agreement with Fleming Cos., Oklahoma City, to serve as its Florida wholesaler until it could open its own facility there in Plant City, Fla.
In March 1992, Super Food filed suit against Albertson's for breach of contract, charging the retailer with breaking its supply agreement for reasons other than lack of satisfactory performance.
In April 1993, a judge for Florida's Ninth Circuit Court rejected the wholesaler's argument that Albertson's had not given reasonable cause, ruling instead that the retailer had given reasonable notice.
That ruling was affirmed in late 1994 by the Fifth District Court of Appeals in Florida. The company said late last year it had exhausted all avenues of appeal.
Super Food shut down its Florida division in May 1992 and watched its financial results decline -- with sales dropping from $1.8 billion in 1991, to $1.6 billion in 1992, to $1.17 billion in 1993 and $1.13 billion in 1994. At the same time, earnings fell from $12.1 million in 1991, to a loss of $5.5 million in 1992, to net earnings of $9.2 million in 1993 and $8.8 million in 1994. Super Food did not report increased sales and earnings until fiscal 1995, when sales rose to $1.15 billion and earnings were $9.07 million.
The other shoe dropped in March 1995 when Winn-Dixie, acquired Thriftway Foods, one of Super Food's largest customers in its Cincinnati division. Thriftway's sales at that time were estimated to be $400 million to $450 million -- about one-third of Super Food's $1.2 billion volume.
Although Super Food has continued to supply those stores, Winn-Dixie has been increasing the number of items it supplies from its distribution center in Louisville, Ky. -- prompting speculation that Winn-Dixie will ultimately supply those stores completely from its own facilities -- a loss of business that industry watchers said could have proved too devastating for Super Food's longtime survival.