KEY FOOD TO SELL FIXED ASSETS TO GHI

DAVID GHITELMAN

BROOKLYN, N.Y. -- Key Food Stores Co-Operative here said last week it has entered into an agreement under which Grocery Haulers Inc., also here, would acquire Key's fixed assets and merchandise inventory.

Key Food currently operates two warehouses here.

In addition, Key Food has said it would enter into a long-term supply agreement with GHI Wholesale Grocers, a GHI subsidiary, to supply Key's member-stockholders with nearly all their merchandise.

Both Key Food and GHI Wholesale Grocers would continue to maintain their principal offices at the Brooklyn Terminal Market here. Both companies said they expect the deal to close later this week.

Key Food's executive and support staff, including buyers, would continue to provide retail support and other services for its member-stockholders.

Key Food has 45 member-stockholders who own and operate 110 supermarkets, mostly in the New York metropolitan area.

Key Food could not be reached for comment.

Burt Flickinger, retail consultant at Reach Marketing, Westport, Conn., said the Key Food-GHI deal "makes a lot of sense from a transportation standpoint."

He noted that outsourcing of transportation has been a general trend in the retail-food industry and that Wakefern Food Corp., Elizabeth, N.J., has had a similar arrangement with GHI for several years. "Key Food members have seen the rewards that outsourcing brought to Wakefern," Flickinger said.

Also, he noted, "Key Food was locked into an older, more expensive union contract" with its truck drivers.

"Grocery Haulers has proven itself over the last 20 years," he said. "Its drivers know New York very well.

"New York and Los Angeles are the most difficult markets in terms of transportation. Distributors don't only have to know how to get to stores, they also have to know alternative routes.

"The Brooklyn Terminal Market has some of the toughest traffic patterns of anywhere in the country."