NEW ENTITY SEEKS FUNDS TO BUY NINE RALPHS UNITS

ELLIOT ZWIEBACH

LOS ANGELES -- A new company called Avalon Supermarket here is attempting to line up financing to acquire nine of 27 units for sale by Ralphs Grocery Co., SN has learned.

Ralphs, based in Compton, Calif., must divest those 27 stores as part of the agreement it made with the California attorney general's office prior to obtaining state approval for its merger last June with Food 4 Less Supermarkets, La Habra, Calif.

Ralphs officials said the company has found buyers for 26 of the 27 units, including eight that already have been sold. The remaining 19 are still operating under the Ralphs or Food 4 Less banners, and some of those, including the nine being sought by Avalon, may not change hands until the end of the year.

Observers told SN Ralphs is selling its stores for anywhere from $200,000 per location up to $1 million or more for some of the higher-volume units.

Executives at Certified Grocers of California, the member-owned cooperative here, told SN they had attempted to pool the resources of independents interested in buying stores and present that package to Ralphs, but Ralphs preferred selling each store individually.

Ralphs has declined to name the buyers for the eight stores already sold. However, SN has determined the details of those transactions:

Three former Alpha Beta stores were sold to Solanki Corp. here. According to owner Uka Solanki, the company will take ownership of the stores in October. Solanki currently operates four stores -- two Shop Wise Markets and two Big Saver Foods; the three additional stores (in Santa Ana, Rosemead and Arcadia) will operate under the Big Saver Foods name, Solanki said.

Three stores -- a former Boys, Viva and Alpha Beta -- were sold to Farm Fresh Ranch Markets, Pasadena. Farm Fresh, which operated two stores, opened two of the new stores (in Los Angeles and Hollywood) last week and will open the third, in El Monte, this Thursday.

A former Alpha Beta in El Monte was sold to Jim Picano, formerly a district manager with Vons Cos., Arcadia. The store opened Aug. 29 under the name Picano's Market.

A former Alpha Beta in Bellflower was sold to Hope Market, which reopened it earlier this month under the banner of Best Value Grocery Warehouse.

While most buyers are adding the former Ralphs units to their existing operations, Avalon would be a totally new entity in southern California.

Avalon expects to pay about $15 million for the nine units, said C. Frederick Wehba, chairman and president of Avalon, in a prospectus.

Observers told SN Avalon is in the process of lining up financing.

The stores, including four former Alpha Betas, three Ralphs units, one former Boys Market and one Food 4 Less warehouse store, would operate under the name Avalon Farms, according to the prospectus.

In the document, Wehba said Avalon will merchandise the stores it acquires "to meet the needs of the local ethnic and income population. Presently, Ralphs does not merchandise to the ethnic areas as it should and leaves a large void for many of the customers in the immediate trade area.

"Avalon Farms will adhere to the demands of its local consumers and will merchandise accordingly. Also, we will stress a larger variety . . . [to] give the average customer, who may not be ethnic, an awareness of the type of product that they can buy or even test themselves."

Wehba said Avalon will increase the number of items per store by about 3,000, with an increase in the amount of high-profit items and a strong emphasis on all perishables departments.

Wehba said the stores will operate on a nonunion basis. He also stated that Avalon Farms plans to grow at the rate of one store per quarter, or four stores per year, with the hope of increasing expansion to eight stores a year within 36 months.