INDEPENDENTS BUY CUB STORES

JON SPRINGER

HICAGO - Cub Foods here last week said it had reached agreements to sell all of its 22 remaining stores in the Chicagoland area.

Central Grocers, the Franklin Park, Ill.-based cooperative wholesaler, said it would acquire 14 of the stores, subsequently dealing seven to co-op member Strack & Van Til and at least four to Garden Fresh Markets, another cooperative member, based in Wheeling, Ill. Central would operate the remaining stores and/or distribute them among other member independents, the wholesaler said. Separately, eight former Cub Foods locations will be sold to MS-Grand Mart, a Lanham, Md.-based international foods retailer entering the Chicago market for the first time.

Earlier this year, an investment group headed by New York hedge fund Cerberus Capital Management acquired the 26 Chicago-area Cub stores from Supervalu. That deal helped settle federal antitrust concerns allowing Supervalu to proceed with its mega-merger with Albertsons.

The Cerberus group closed four of the acquired stores earlier this summer.

Cub stores were scheduled to begin liquidation sales on Oct. 8 and close within six to eight weeks, Cub spokeswoman Annette Roder told SN.

New owners said they plan to start reopening the stores under new banners as soon as this fall and on into next year. All parties declined to provide financial details.

Strack & Van Til, based in Highland, Ind., will reopen its seven new stores under the Strack & Van Til conventional or Ultra Food discount banners early next year, according to Dave Wilkinson, president. Strack is to acquire Cub stores in Joliet, Downer's Grove, Wheaton, Hanover Park, Lombard, Plainfield and on Elston Avenue in Chicago.

"This is a great opportunity for Strack and Van Til," Wilkinson told SN. "It gets us a better foothold in the Chicagoland area, and as former Cub operators, we're familiar with the layouts and the business."

The deal to acquire the Cub stores was in the works almost as soon as the Cerberus Group took them over, the buyers said.

For Garden Fresh Markets, new Cub stores in Arlington, Mundelein, Round Lake and Waukegan will nearly double the store count of the existing chain and should more than double its sales, said Tim O'Neill, vice president of operations for the fresh-focused chain.

Garden Fresh was founded 27 years ago and has grown to five stores, each increasing in size, O'Neill said. The four new locations are between 60,000 and 75,000 square feet each. The company was considering taking on a fifth store from Central last week.

"It's long been a goal of this company to grow it into a chain of 10 or 12 stores," O'Neill told SN. "This was an opportunity to do that."

MS-Grand Mart, the international food retailer that has agreed to purchase eight former Cub stores, will refashion them into a variety of ethnic-focused banners, according to Shaun Lee, director of acquisitions and development. Grand Mart currently operates eight stores in the Washington, D.C., and Atlanta markets.

Lee said some of the locations may be converted to Mercado del Pueblo, a "farmers' market" type of store catering to Latino populations, while others will reopen as Grand Mart International, a full-service store featuring U.S. and international products with a focus on meats, fish and fresh produce.

"I don't think Chicago has seen the kind of store we operate yet," Lee told SN. Supervalu supplies U.S. products at Grand Mart, with other products sourced worldwide. The company is family owned but is planning a public offering, he added.

Though founded in Chicago as a discount warehouse chain, Cub stores in recent years were repositioned as conventional grocery stores. But that image, according to O'Neill, didn't take with Chicagoans.