Confirmed: First 2 Fresh & Easy Stores Open in Sacramento March 7; 3 in Metro-Area March 14

Tesco's Fresh & Easy Neighborhood Market today announced the opening dates for its first five stores in Northern California's Sacramento metropolitan region.

Fresh & Easy first announced its plans to enter the metro Sacramento market in early 2008, where it said it would open an initial 19 stores. (See here for details and a list of the numerous other planned stores we've uncovered in the region.)

It planned to start opening the first of those 19 stores beginning around late 2009 and no later than mid-2010. Those plans were postponed until now.

The grocer's announcement today confirms the opening dates for the first batch of stores in the Sacramento region we've had listed on our F&E Store Openings Q1 2012 link at the top of the blog.

Below are the locations and opening dates of the first five stores Fresh & Easy Neighborhood Market plans to open in the Sacramento metro-region:

>Sacramento
Watt Avenue & El Camino Avenue
Opens March 7, 2012

>Sacramento
Mack Road and Franklin Boulevard
Opens March 7, 2012

>Lincoln
Lincoln and Sterling Road
Opens March 14, 2012

>Elk Grove
Elk Grove Florin Road and Calvine Road
Opens March 14, 2012

>Folsom
East Natoma Street and Blue Ravine Road
Opens March 14, 2012

Northern California - one year on

The opening of the first stores in metropolitan Sacramento, Tesco's newest market region with its Fresh & Easy chain, comes one year after the grocery chain began opening its first stores in Northern California.

There are 18 Fresh & Easy stores now open in Northern California - 15 units in the San Francisco Bay Area; one store in Fairfield, which is on the outskirts of the Bay Area off Interstate-80; one Fresh & Easy grocery market in Vacaville, which is about midway between the Bay Area and the Sacramento region; and a store in Modesto, which is in the Northern Central Valley.

There are 182 Fresh & Easy stores in California (138), Nevada (20 units), and Arizona (24 units). Of the 138 stores in California (the grocer opened two units in the Golden State yesterday), 106 units are in Southern California, seven stores are in the Bakersfield and Fresno regions in the mid and southern Central Valley, and 18 units are in Northern California.

Region's 'Big Three' (and unionized) grocery chains

Fresh & Easy's launch into the Sacramento-area market comes at a time when the region's three leading grocers - West Sacramento-based Raley's, Modesto-based Save Mart/Lucky and Pleasanton, California-based Safeway Stores, Inc. are in negotiations with the United Food and Commercial Workers (UFCW) union over a new three-year labor contract.

The three supermarket chains are numbers one (Safeway), two (Save Mart) and three (Raley's) respectively in terms of market share in Northern California. In the metro-Sacramento market, Raley's is number one, followed by Save Mart and Safeway.

The old contract expired in October 2011, and the union locals and the "Big Three" Northern California grocery chains have been extending the dates since then. The negotiations continue.

Raley's and Save Mart/Lucky are family-owned, privately-held companies. Safeway Stores, Inc. is publicly-held.

The three chains negotiate with the union locals. Once a deal is made, the smaller unionized grocers in the region then generally accept whatever contract deal is cut and voted on and ratified by UFCW members.

There are about 52,000 unionized grocery clerks in Northern California, according to a spokesperson for Local 5. There are numerous other chains and independents in Northern California that are unionized and operating under the extended contracts.

Last week Raley's, which operates 131 stores in Northern California under the Raley's (superstores), Bel-Air Markets, Nob Hill Foods (supermarkets) and Food Source (discount warehouse) banners, broke out of the joint-talks with Save Mart/Lucky and Safeway, and is now negotiating independently with the union locals.

Raley's, which has been struggling financially and going through a reorganization since 2010, is asking the union for various concessions in the health and welfare benefit and pension areas.

Raley's CEO Michael Teel, who's family owns the privately-held chain, says the grocer needed to go out on its own in the negotiations because it wants a deal, with concessions, fast. Teel also says Raley's would not have had to close two stores recently, one in Modesto and the other in the Sacramento region, had the UFCW accepted its proposal. He also said additional store closures are possible if Raley's can't get the concessions its asking the union for.

An official of one of the Northern California UFCW locals told us recently that the concessions Raley's wants as currently stated "won't fly with our membership." As a result, the union and the chain have yet to reach an agreement that the union can take to its members for a vote, he says.

The contract extensions with all three chains run out before the end of this month.

Non-union grocers on the move

Meanwhile, Tesco's Fresh & Easy is just one of many non-union food and grocery retailers opening stores at a fast pace in Northern California in general and in the Sacramento region specifically. Others include Whole Foods Market, Sprouts Farmers Market and Sunflower Farmers Market. All three have new stores set to open in metro Sacramento this year.

Over the last year Tesco has been repositioning Fresh & Easy to be more of a specialty grocery store. All three of the chains mentioned above, and Fresh Market mentioned below, plus Trader Joe's, which has stores in the Sacramento region, are direct competition in that niche.

Safeway and Raley's, which both put a major focus on fresh foods and specialty as well as on the basics, are also direct competition for Fresh & Easy, including in the fresh-prepared foods category. Both chains offer extensive ready-to-eat and ready-to-heat fresh foods, as do Whole Foods, Sprouts and Sunflower. Save Mart/Lucky does as well, but to a lessor degree than the others.

Costco, which has customer demographics that cut across all income levels, is also a major food and grocery retailing force in the Sacramento metro-market, as are a number of smaller chains and independents, such as Woodland-based (about 12 miles from Sacramento) Nugget Markets, which has a number of stores in the region.

Additionally, as we previously reported, Walmart Stores, Inc. is locking up numerous locations for its smaller-format (26,000-to-45,000 square-foot) Neighborhood Market supermarkets in the Sacramento region, along with proposing a few new supercenters, and adding fresh food and groceries (hybrid supercenters) to some existing discount format stores.

Discount chain Target, which is non-union like all the others mentioned above, has been and continues to add its "P-Fresh" fresh food and grocery markets inside many of its existing target discount format stores in the region.

Another non-union grocery chain, North Carolina-based The Fresh Market, also has plans to start opening stores in Northern California - the Bay Area and Sacramento region is its focus - this year, as we've previously reported in Fresh & Easy Buzz.

Bottom line: Not only are all these non-union grocers, which are adding stores rapidly, added competition for the Sacramento region's "Big Three" unionized supermarket chain's - Raley's, Save Mart/Lucky and Safeway - they also will make Tesco's launch of Fresh & Easy in the region less than a month from today much more difficult and competitive (and expensive) than it would have been had the retailer started opening its stores back in 2009-2010 as it originally planned to so.

Why: The level of competition was much less then that it is now - and it's going to get even more competitive in the metro-Sacramento market over the next year and beyond, particularly as Walmart starts opening its smaller format Walmart Neighborhood Market supermarkets in the region, many of which - for example a Walmart Neighborhood Market is slated for Lincoln, California - are located not far from future Fresh & Easy locations in the Sacramento metropolitan region, along with in other parts of Northern California.

Suggested Reading

August 29, 2011: Meaningful Move or Too Little Too Late? Fresh & Easy Neighborhood Market Planning Early 2012 Metro Sacramento Market Launch

August 31, 2011: Tesco Says Sayonara to Japan, Good Morning to Sacramento

January 18, 2012: Fast-Growing The Fresh Market Chain On Track to Launch in California This Year

January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores

January 9, 2012: Exclusive: Tesco's Fresh & Easy Closing 12 Stores; We Have the Locations

December 5, 2011: Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

February 1, 2012: Tesco's Fresh & Easy By the Numbers ... In Case You Want to Keep Score at Home or in the Office

Raley's Combining High-Tech and High-Touch Tools to promote its Stores For the Holidays

Above: Inside the Raley's superstore on Colusa Avenue in Yuba City, California. The 'Raley's Kitchen' in the photo offers in-store, chef-prepared entrees, sides and more, including meats hand-carved to order by the chef. It's part of the extensive deli and fresh-prepared foods offering in the store, which is a category Raley's is noted for. Photo courtesy I-5 design. March 3, 2011.

Turkey & Technology -- Grocers, new technologies and holiday promotions

West Sacramento, California-based Raley's Family of Fine Food Stores is using a combination of high-tech digital and high-touch low-tech tools to create promotions it hopes will drive shoppers into its stores in Northern California and Northern Nevada during the crucial-for-grocers mid-November to December 31 holiday food and grocery sales period.

Text for a discount and chance to win

On November 16 (and running to December 31) Raley's kicked off a promotion in which shoppers are invited to send a text message to the number "678678 Save" in order to receive $10 off any purchase of $100 or more in one of the grocer's Raley's (superstores) Bel Air Markets and Nob Hill Foods (supermarkets). Raley's operates a handful of discount warehouse stores under the Food Source banner. The promotion doesn't apply to the Food Source stores.

After sending the text message, consumers get a confirmation code back, which they give the store clerk at checkout in order to get the $10 discount of their purchase of $100 or more.

Sending the text message also enters shoppers into a contest, which offers the chance to win a free deli party tray.

Raley's is giving away 10 of the deli party trays, which include: two Spinach Dip trays valued at $19.99 each; four deli meat and cheese trays (valued at $29.99); and four Quesadilla Party Trays, which have an estimated value of $44.99, according to the grocery chain.

Participants must be 18-years-old or older in order to enter the text message-based contest.

The drawing for the deli party trays, which is being conducted by the Pocketshop LLC firm for Raley's, takes place December 15. Any remaining prizes will be rewarded on December 31, according to the grocer.

Raley's promoted the send-a-text-for-a-discount promotion and contest on the front page of its November 16-24 weekly advertising circular, which is direct-mailed and inserted in daily newspapers, and distributed to homes throughout Northern California and Northern Nevada.

The grocer also promoted the send-a-text-for-$10-off promo using Twitter's Promoted Tweet program, doing so during the week running up to the Thanksgiving holiday.

Raley's is currently promoting it on its Facebook page, on Twitter and in its stores.

We like the text-for-a-$10-dollar discount for three main reasons.

First, it requires shoppers to do a little work in order to get their $10 discount, unlike merely putting a coupon in the weekly ad circular or posting it online. And since text messaging is so common and popular, it's second nature for consumers to take a few seconds and text for their discount, which helps to ensure a higher participation level (than say sending an e-mail to get the discount) in the promotion and contest because it uses what's become a fast to use and near-ubiquitous digital technology.

Additionally, having shoppers send a text in order to get the $10 off and participate in the contest also has the added marketing benefit of capturing all those phone numbers from which the texts are sent. Such a data base could be used by Raley's in the future, say to send out special text-based promotions our other communications, for example.

Lastly, the text-for-a-deal promotion and contest creates some excitement among shoppers who participate.

It also offers the potential to generate some good word-of-mouth PR for Raley's. For example, it's likely some people sent a text messages to family members and friends telling them about the $10 off deal and the contest, and in turn those folks might have sent text messages to others, sharing the message.

Using social media - Twitter and Facebook - to communicate the promotion also has the potential to create additional virally-spread excitement around it, resulting in even more word-of-mouth buzz for the text message-based promotion.

Retweet to help the hungry

Speaking of social media and creating buzz, on Monday Raley's launched a charitable promotion for its Food For Families program, which donates food and cash to food banks in the communities where it operates its stores.

Using Twitter - both the Promoted Tweets program and its own Raley's feed - along with its Facebook page, the grocer posted this tweet yesterday, November 28: "Giving goes viral! Please RT this message and @raleysstores will donate 25 cents to Food For Families. Visit us here at Facebook."

As the tweet says, for every RT, which stands for retweet and is a way people can share other users' tweets with their followers on Twitter, Raley's is donating 25 cents to its Food For Families program, and thus to the food banks, every time the tweet, and additional ones like it, are retweeted on Twitter.

Like the text message promotion, this donation-backed, cause-related promotion also offers Raley's a solid opportunity to have a considerable amount of buzz created around its brand and stores, along with doing good at the same time. The grocer obviously realizes the potential, as it hopes it's giving offer goes viral.

Raley's also has an additional - and generous - promotion going on for its Food for Families program for the holiday season.

The grocer is offering grocery bags of food for the hungry in its stores for $10 per-bag. Between now and Christmas, for every bag customers buy to donate, Raley's is doubling the offer, donating another $10 bag of groceries to local food banks, for a total of $20.

Shoppers don't even have to visit a Raley's-owned store to donate. They can do so online here, and Raley's will match the donation. The grocer will then donate the groceries directly to the food bank closest to where the person lives.

Free black coffee on Black Friday

On Friday November 25 (Black Friday) Raley's put away the high-tech tools and used old fashion human-power and shoe leather to promote its stores in its hometown Sacramento area, offering a touch of warmth and much-needed caffeine to early-bird holiday shoppers.

We call the approach high-touch, as compared to high-tech.

The privately-held grocer, which has sales of about $3.1 billion annually and is owned by Joyce Raley-Teel (daughter of founder Tom Raley and the company's chairwoman) and headed up by her son, CEO Michael Teel, sent street teams armed with hot cups of Peets Coffee and discount coupons out to numerous jam-packed malls and shopping centers in Sacramento and the nearby cities of Folsom, Roseville and Natomas on Black Friday (and the following Saturday and Sunday).

The Raley's ambassadors armed with free hot coffee and the discount coupons were "warmly" received by the early bird Black Friday shoppers on what was a fairly chilly late night/early morning in the Sacramento region, according to a Fresh & Easy Buzz reader from Sacramento who wrote us and said she was out shopping with her daughters on Black Friday and received a much-appreciated free hot cup of Joe (or in this case Peet) from members of the Raley's street team.

A Christmas tree lighting meets Foursquare 

The street team promotion on Black Friday came just two days before what is a big annual event for Raley's and the Sacramento area.

That event, held the night before Thanksgiving on November 23, is the annual Raley's-sponsored Theatre of Lights Christmas Tree lighting in Old Sacramento, which is an historic and popular part of the city that dates back to the California Gold Rush era of the 1800's. [Kati Garner, a writer for the local Sacramento Press blog has a write up and great photographs of the event, which was attended by over 4,000 people, here]

Raley's Stores, which also uses the Foursquare social media site in addition to Facebook and Twitter, offered consumers a $5 digital coupon if they checked in on their smart phones at its Foursquare home while attending the tree lighting event on November 23.

'Tis the season

The less than two month Thanksgiving through New Year's Day holiday selling season offers a huge opportunity for food and grocery retailers in the U.S. The three holidays are numbers one, two and three respectively in terms of the amount of money consumers spend on food, compared to all other holidays, for example.

But this opportunity, like most do, also comes with challenges, the big one for grocers being the fierce competition out there during this time of year. Every grocer knows, after all, what we just told you, which is that the period from mid-November to the end of December is a time when grocery shoppers are spending big. And each grocery chain wants the majority of those holiday food dollars to be spent in its stores, which generally means heavy promoting.

And, usually, to the victor go the spoils.

Beyond the season

Raley's is currently conducting a number of promotions in addition to those we've highlighted. One of the things the Raley's promotions we've discussed in this piece have in common is that each one also offers a secondary marketing/branding element to them for the chain, although we doubt the grocer planned it that way.

For example, the new-school digital and social media promotions help better brand Raley's as a modern and high-tech savvy of grocer, while the old-school street team event is a reminder of the high-touch aspect of the retailer.

And the generous food drive and assistance program to help the hungry, both in its digital and non-digital aspects, continues to brand Raley's as a caring grocer that helps people in the communities where it has its stores.

Raley's has been struggling financially for the last three or so years. Last year Michael Teel returned as CEO of the 75-year-old-plus family-owned grocer founded by his grandfather and owned by his mother, and has since been leading a reorganization strategy.

It's difficult to know how the plan is working because being closely-held Raley's does not release revenue or profit/loss information. Teel previously was CEO of Raley's in the 1980's-90's. He left to persue a variety of other business interests.

On the cost-cutting side of the balance sheet Raley's has so far gotten by fairly lightly, laying off about 300 people at its corporate headquarters and closing a few stores, in addition to most-recently announcing it will no longer pay health benefits for its retired except employees. Store-level workers, which comprise the vast majority of the grocery chain's employees, belong to the UFCW union. Therefore the move doesn't affect those already retired or future retirees.

As part of the restructuring which began last year when Teel took over as CEO, he flattened the organizational structure, eliminating many senior-level people, including in the marketing, buying and merchandising departments at the corporate headquarters in West Sacramento.

The move seems to have worked in our observation and analysis because since then Raley's marketing, merchandising and promotional activity has gotten not only better but more creative, along with becoming much more aggressive, as evidenced in part by the programs featured in this story.

The retailer has also sharpened its everyday pricing profile since early 2010, along with offering improved promotional prices on the items it advertises in its multi-page weekly advertising circular, among having made a number of other changes for the better.

The competition in Northern California, where the majority of the stores are located, is only going to get tougher, beginning next year, so Raley's will need to, among other things, continue sharpening its pricing pencil, along with continuing down the path it been on for a little over a year in developing, launching and implementing creative and effective promotions, both for the holidays and everyday, in order to meet the new challenges and increased competition coming its way.


[Editor's Note: It's a brave new high-tech, digital, social media world out there for food and grocery retailers. And the new tools offer retailers a myriad of new ways to promote their stores for the holidays. Between now and the end of December we'll be running a number of stories focusing on many of these new technologies, using the theme in the sub-head at the top of this story - Turkey & Technology to identify the stories. This piece about Raley's is our first.]

May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What?

Companion Story: October 18, 2011: Look for Fresh & Easy Neighborhood Market to Grab Closing University Avenue Andronico's Supermarket in Berkeley CA ... If it Can

The Insider - Heard on the Street

In May I wrote in detail about the financial problems facing one of California's oldest family-owned grocery chains, 82-year-old Andronico's, which at the time operated eight supermarkets in Northern California's San Francisco Bay Area.

[Read my May 30, 2011 here: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill.]

In the column I said the survival-mode shoes would soon start dropping at financially troubled Andronico's, which underwent a name change last year from Andronico's Markets to Andronico's Community Markets. They did ... And continue to do so.

The first shoe dropped in July, when the upscale-oriented food and grocery chain, which was founded in 1929 by Greek Immigrant Frank Andronico and has been headed for two-plus decades by his grandson, Bill Andronico, closed its store in the Stanford Shopping Center in Palo Alto, California. I pointed out in the May piece that the store was one of the three worse-performing of the eight Andronico's units.

In August the other shoe - perhaps better described as a heavy-heeled boot - dropped: Andronico's, with one less store than it had a month earlier, filed for Chapter 11 bankruptcy protection, listing debts in the $10-$50 million range, with assets about equal to its debt load.

Not long after the August filing in federal bankruptcy court in Oakland, California, Renovo Capital, a financial firm that invests in companies in financial distress, provided about $5 million in asset-secured debtor-in-possession financing to Andronico's to keep it alive. Renovo also began negotiations with Andronico's to acquire the grocer, which has been owned by the Andronico family since 1929 (three generations).

Last Thursday Renwood Opportunities Fund, a partnership created in October 2010 between Renovo Capital and Rosewood Private Investments, acquired Andronico's from the family for about $16 million, having received final approval to do so from the bankruptcy court. The $50 million Renwood Fund was established last year by the two investment firms to invest in distressed middle-market companies and special situation opportunities.

Two days before, on Tuesday, the financial firms also bought bankrupt nine-store San Francisco Bay Area specialty foods store chain A.G. Ferrari Foods through the $50 million Renwood Fund.

Like Andronico's, A.G. Ferrari, which has three stores in San Francisco, two in Oakland, and one each in Berkeley, Lafayette, Corte Madera and Los Altos, is a food retailing institution in the San Francisco Bay Area. It was founded as a family-owned and operated importer of Italian Foods in 1919. The first store was opened shortly thereafter.

The small stores offer imported and domestic specialty and gourmet groceries, including under it's own label, some frozen foods, and an extensive selection of ready-to-eat and ready-to-heat fresh-prepared foods, with a specialization in Italian cuisine.

Paul Ferrari, a member of the founding A.G. Ferrari Foods' family and who remains president of the chain - for now - expanded the operation over the last couple decades, ending up most recently with 13 stores. Six stores have been closed as part of the specialty retailer's financial problems, which resulted in it filing Chapter 11 earlier this year.

The new owner has brought on ex-Whole Foods Market man John Clougher, who as I reported in my May 30 column has been a top executive at Andronico's since 2010, as CEO of A.G. Ferrari.

Renovo-Renwood hopes it can create some synergies between the seven-store A.G. Ferrari Foods and six-store Andronico's, which is a major reason why they bought both out of bankruptcy, and which is one reason why Clougher, who's been at Andronico's since last year, was named CEO of A.G Ferrari.

In terms of that attempt to find synergy, here's a scoop: Look for A.G. Ferrari's private brand of Italian and related specialty and gourmet food products to start showing up on the shelves and in the perishable cases at the six Andronico's stores in the coming weeks.

Back at Andronico's, as part of the Renovo-Renwood acquisition, Bill Andronico remains CEO of the food and grocery chain founded by his grandfather, Frank, and headed for decades by his father, John, until he took over in the 1980's - at least for the time being.

A week after acquiring Andronico's, Renovo-Renwood made its first move yesterday, announcing it's closing the Andronico's unit on University Avenue in Berkeley, California.

The closing will leave the grocer with three grocery stores in the Easy Bay Area city of Berkeley - one each on Shattuck, Telegraph and Solano avenues.

The other three stores are in the Bay Area cities of San Francisco, Los Altos and San Anselmo.

As I correctly reported in my May 30 column, based on information from my sources, the University Avenue unit was the poorest performing of the four Berkeley stores, something the new owner confirmed yesterday.

The new owner said yesterday that it doesn't plan to close any of the remaining three stores in Berkeley. But it wouldn't surprise me in the least bit if the investment firm's aren't forced soon to close one of the remaining three Andronico's stores in the city, even though I believe it would like to keep all three for reasons of having a better retailing critical mass in Berkeley.

My predicted candidate for closure in Berkeley, if it comes, is the Telegraph Avenue Andronico's unit, which over the last couple years has lost considerable sales to a nearby Whole Foods Market store and Berkeley Bowl, a very popular and high volume local two-store independent grocer. Both Berkeley Bowl stores are located in the city.

The store on Solano Avenue has seen better days as well. And in the coming year-to-two years it will face increased competition from Safeway Stores, which plans to expand and renovate a store nearby, and Whole Foods Market, which is planning a second store not far from the Shattuck Andronico's unit in Berkeley.

The Shattuck Avenue Andronico's market has historically been the grocer's top-performer in the city, but it too is coming under increased competition from Safeway Stores, which also has plans to expand and renovate an existing supermarket not far from the location.

The new owner also must take a serious look at the Andronico's units in the North Bay Area city of San Anselmo (Marin County) and Los Altos, which is in Silicon Valley in the South Bay and not far from the Palo Alto market the grocer closed in July.

Each of the units are Andronico's only grocery stores the respective regions. Having a single store in a market-area - and the North and South Bay are both heavily populated and competitive areas - is a difficult proposition for a grocer because of a lack of critical mass (stores) when it comes to marketing, advertising and promotion. Renovo-Renwood, which doesn't have deep experience in operating grocery stores, will find this out sooner rather than later.

Selling or closing one or both of these stores is something I believe could come before a closing or selling of the Telegraph Avenue store in Berkeley would. Under this scenario, the new owners could sell one or both of these stores and use the cash to improve and promote the remaining four stores, the three units in Berkeley and the supermarket in San Francisco, which is the top-performing store out of the six grocery markets.

Even Andronico's best performing store, the unit in San Francisco's Inner Sunset District noted above, has its challenges. Last year Whole Foods Market opened a new store at Haight and Stanyon Streets in the San Francisco's Haight-Ashbury District.

The Haight-Ashbury Whole Foods store, which is about a five minute drive from the Andronico's unit in the Inner Sunset, has taken some business away from Andronico's, which like Whole Foods specializes in natural, organic and specialty foods, as well as fresh-prepared foods.

The Inner Sunset Andronico's should be able to hold its own though for a couple key reasons.

First, it's the only full-service supermarket in the highly-populated Inner Sunset District. The store has also been a fixture in the neighborhood for decades and has fairly strong customer loyalty.

Additionally, unlike Whole Foods, Andronico's offers a full-selection of mainstream food and grocery products - think big brands like Kraft and Coke and products like Kellogg's Frosted Flakes and French's Mustard - in its stores, including the unit in San Francisco. This is a big plus for the grocer at the Inner Sunset location vis-a-vis the nearby Whole Foods Store.

Additionally, the nearest major mainstream competitor to the Andronico's store is a fairly small Safeway Store a couple miles away on Noriega Street in the Outer Sunset District. There's very little available space in the Inner Sunset for a competitor to open a decent-sized grocery store, as well, which makes the Andronico's location valuable from a geographical perspective.

It's too early to know if Renovo-Renwood can turn Andronico's around, let alone make a success out of the small chain, which has a history of innovation in the Bay Area, which include innovations in interior store design, display fixture use and merchandising that have been copied locally by Safeway Stores, Whole Foods Market and others.

The new owner faces numerous challenges. These include: the diminution in quality and poorer-then-historical appearance of the stores over the last couple years, which the new owner says its going to reverse by investing in renovations; increased competition in every city where the six stores are located; the debt load the new owner is assuming, which includes $1 million owned the United Food & Commercial Workers (UFCW) employee pension fund - Andronico's is a unionized grocer - and more.

Of course the investment firms just might want to turn Andronico's and the six stores around "just enough" to sell the chain off as a whole or sell the stores off individually to multiple grocers, which is the strategic plan I believe Renovo-Renwood is attempting and hopes to pull off.

And speaking of unions and grocers, the contract between the UFCW and Northern California's unionized grocers, which includes Andronico's, expired ten days ago. Contract negotiations are currently taking place between representatives of the union locals and Northern California's three-largest unionized chains, Safeway Stores, Inc., Save Mart and Raley's.

Based on Andronico's poor financial condition, competitive challenges and the fact Renovo-Renwood is going to have to invest substantial capital in the grocery chain in order to keep it alive, not to mention make it successful, it wouldn't surprise me in the least bit if the new owners ask the UFCW union locals for a number of contract concessions, or even attempt to leave the union completely, although that will be near-impossible, when it comes to negotiating and signing a new three-year contract this year.

In the past, Andronico's, like most of the unionized small chains and independents in Northern California - and there are many of them - essentially agreed on the terms of the contract - often called a "me too" contract deal - negotiated and agreed to between the union locals and the region's "Big Three" chains.

Andronico's did this last time around, three years ago. But that was then and this is now. Were it not for Renovo-Renwood providing emergency financing for and then acquiring Andronico's, the 82-year-old grocer would likely have gone out of business. That would have put around 350 unionized store-level grocery workers out of a job.

I expect the new owners to attempt to use this leverage on the union locals in contract negotiations, probably in separate talks from those currently going on between union officials and the "Big Three" chains, although the fact the pension fund is owned $1 million by Andronico's, a debt which the bankruptcy court hasn't discharged according to the my recent review of the court's records, should give the UFCW locals leverage of their own, in turn.

The store-level employees of Andronico's, many who've been in the UFCW union for 10 or more years, and in the case of others are close to retirement, will also join with the union if the new owners make any attempts to go non-union. Many are already very concerned about the debt owed the union pension fund, for example.

The good news, if you appreciate the saving of an 82-year-old regional food and grocery retailing institution - Andronico's Community Markets, or Andronico's Markets if the new owners take the advice I offered in my May 30 column to go back to the old name - is six of the eight stores remain in business, as for now does the "Andronico's" name and brand.

I say "for now" because those of us with experience in food and grocery retailing acquisitions know they seldom end up down the road turning out like the buyers and sellers say they will, particularly when the acquired retailer is a financially distressed grocer and the buyer is a fund, with an expected return on investment, created by two investment firms.

Such investment vehicles are designed to eventually make money for the firms, usually within a five-year time horizon. And that money is generally made by selling the financially distressed property (read Andronico's) that was bought at a discount.

My bottom line: The new owners will restructure the Andronico's operation, lowering labor costs (they've started that process already with the decision to close the store on University Avenue in Berkeley); invest some cash in improving the looks of the stores (any they don't sell soon); pump up the marketing and promotional budget and spend somewhat; and then attempt to either sell all six supermarkets as a whole or sell off the six stores in pairs or individually.

The predicted time horizon: One-to-four years, with a preference from the new owners to achieve the objective, with a decent profit, sooner rather than later.

'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill Passes California State Senate; Headed to Governor's Desk For Action

self-service or "assisted" checkout at Fresh & Easy.

Breaking Buzz

Assembly Bill 183, the legislation to ban sales of alcoholic beverages at self-service checkout stands in retail stores in California, has passed in the California State Senate and is being sent to Governor Jerry Brown, who has until October 9 to either sign the bill into law or veto it. Today is the last day of the 2011 legislative session and the last day for the California State Legislature to send bills to the Governor for action by October 9.

AB 183 passed late Thursday by just the 21-vote majority needed to gain approval and be sent to the Governor.

Twenty one members of the California State Senate voted in favor of passing AB 183 late yesterday, with 16 members voted against passage of the measure, which if signed into law by the Governor will require face-to-face transactions between retail store employees (full-service checkout) and customers whenever alcoholic beverages are purchased at retail in the Golden State.

Three members of the California State Senate, two Democrats and a Republican, didn't vote on the bill yesterday. Those members are Lois Wolk and Carol Liu (Democrats), and Doug LaMalfa, who is a Republican.

As we reported on Wednesday, AB 183 failed in its first vote in the California State Senate on Tuesday, even though it received 17 votes in favor of passage to 16 opposed, because it failed to get the 21-vote majority required to pass. [See - September 7, 2011: Self-Service Checkout Booze Ban Bill Fails in California Senate First Time Around; 'Missing Seven' Dems Hold Key to Passage By Friday.]

However, as we correctly pointed out in the story, Senator Christine Kehoe (Democrat-San Diego), who is the bill's manager in the California State Senate, was able to get a motion to reconsider the bill passed following AB 183's failure to get the needed 21 votes.

Her reason for doing so was because seven Senate Democrats - Senate Majority Leader Ellen Corbett, along with members Noreen Evans; Carol Liu; Curren Price; Michael Rubio; Lois Wolk; and Leland Yee - didn't vote on AB 183 on the Senate Floor on Tuesday.

Five of the "Missing Seven" Democrats voted late yesterday in favor of passage of AB 183, which is what allowed the self-service booze ban bill to gain the needed 21 votes and pass. Senator Rubio voted against the bill. Senators Wolk and Liu didn't vote on AB 183 yesterday, as was the case on Tuesday.

As we've noted in our extensive coverage and analysis of AB 183 and the two bills that preceded it in 2008 (AB 523) and 2010 (AB 1060), if the legislation that's now been passed by both the California State Assembly and California State Senate and is being sent to Governor Jerry Brown becomes law, it will have the most immediate and significant impact on Tesco's Fresh & Easy Neighborhood Market because the chain, which has 128 of its 177 fresh food and grocery markets in California, is currently the only grocer in the Golden State that offers self-service checkout only in its stores.

Other grocery chains in California, such as Winco Foods, Kroger's Ralphs, Save Mart Supermarkets and a couple others, for example, offer customers a choice of both full and self service checkout in some of their stores. But Tesco's Fresh & Easy has a self-service checkout only model and system which it uses in all its stores in California (128 units), metro Las Vegas, Nevada (21 stores) and metro Phoenix, Arizona (28 units). Fresh & Easy calls its system assisted checkout because if asked store workers will assist customers in scanning and bagging their grocery purchases.

Fresh & Easy Neighborhood Market self-checkout system, like those of all other retailers in California, also requires a face-to-face interaction with a store clerk anytime alcoholic beverages are purchased by customers.

When a customer scans an alcoholic beverage item, the self-service checkout system locks up, alerting store workers. Once this occurs a store clerk goes to the checkout and checks the customers identification card to make sure he or she is 21, which is the legal age required to purchase alcohol in California. The clerk must then punch a code number into the cash register in order for the customer to complete his or her transaction.

Tesco's Fresh & Easy and other opponents of AB 183, such as the California Grocers Association, the California Retailers Association, California Chamber of Commerce and others, argue this safeguard is enough to prevent minors from purchasing alcoholic beverages using the self-service checkouts.

In contrast, proponents of AB 183, which include its author, Assemblywoman Fiona Ma (Democrat-San Francisco), the majority of members of the California Assembly and Senate who passed the bill, and groups like Mother's Against Drunk Driving, the United Food and Commercial Workers Union (UFCW), various law enforcement organizations and others, say allowing sales of alcoholic beverages at self-service checkouts increases the chance minors can game the system and purchase adult beverages.

But the argument over whether or not AB 183 should pass in the California State Legislature is now moot. The legislation passed by a big majority in the California State Assembly in May and by 21 votes (to 16 against) in the California State Senate yesterday.

Now it's all up to Governor Jerry Brown to decide if what we've nicknamed the "Son of Tesco Fresh & Easy Law" (AB 183) because of its singular impact on the grocery chain of the same name becomes law in California. We nicknamed the previous two bills, AB 523 in 2008 and AB 1060 in 2010, both of which had as their goals the banning of alcohol sales at self-service checkouts, the "Tesco Fresh & Easy Law," hence the addition of "Son of" to what is now a four year old nickname for three bills since 2008, all of which have been authored to ban the sale of alcoholic beverages at self-service checkout stands in retail stores in California.

AB 523 failed to make it out of the California State Legislature in 2008. But In 2010, AB 1060 passed in both the California State Assembly and Senate. Republican Governor Arnold Schwarzenegger vetoed the bill at the final hour though, as we reported here - September 30, 2010: Fresh & Easy Neighborhood Market Hopes Governor Schwarzenegger Can Find His Veto Pen Before Midnight Tonight

Jerry Brown, the former two-term Governor of California (1970's-80's), a Democrat who replaced Republican Arnold Schwarzenegger in Sacramento in 2011, has until October 9 to either sign AB 183 into law, veto it, or do nothing. If Brown doesn't sign or veto the bill by the October 9 deadline it automatically becomes law.

Follow the Story Below - Legislation to Ban Sales of Alcoholic Beverages at Self-Service Checkout Stands in California: A History - 2008-2011

September 7, 2011: Self-Service Checkout Booze Ban Bill Fails in California Senate First Time Around; 'Missing Seven' Dems Hold Key to Passage By Friday

September 6, 2011: California State Senate Set to Vote on Self-Service Checkout Booze Ban Bill This Week

August 20, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill AB 183 Passes Out of California Senate Appropriations Committee; Headed For Senate Floor

July 27, 2011: 'Son of Tesco Fresh & Easy Law' Moving Through State Senate: Will California Determine Fresh & Easy Neighborhood Market's Checkout Scheme?

June 4, 2011: 'Son of Tesco Fresh Easy Law': Self-Checkout Booze Ban Bill AB 183 Sails Through California State Assembly; State Senate Next Stop

May 11, 2011: ‘Son of Tesco Fresh & Easy Law' - California Assembly Appropriations Committee Passes Self-Checkout Ban Bill AB 183 By 12-4 Margin

May 6, 2011: 'Son of Tesco Fresh & Easy Law': California State Assembly Appropriations Committee Hearing For AB 183 Cancelled

May 4, 2011: 'Son of Tesco Fresh & Easy Law': Strong Chance California Legislation to Prohibit Alcohol Sales at Self-Service Checkouts Could Pass This Year

September 30, 2010: Fresh & Easy Neighborhood Market Hopes Governor Schwarzenegger Can Find His Veto Pen Before Midnight Tonight

September 28, 2010: Fresh & Easy Neighborhood Market Hoping Governor Schwarzenegger Prefers His Veto Pen When it Comes to AB 1060

September 25, 2010: Future of Fresh & Easy Neighborhood Market's Self-Service-Only Checkout in California Up to Governor Schwarzenegger

August 24, 2010: California State Senate Sends Bill to Governor That Could End Self-Service-Only Checkout at Fresh & Easy Neighborhood Market

August 15, 2010 piece : Bill to Ban Alcoholic Beverage Sales at Self-Service Checkouts Would End 'Self-Service Only' at California Fresh & Easy Neighborhood Market Stores

July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages.

California State Senate Set to Vote on Self-Service Checkout Booze Ban Bill This Week

Self-service or "assisted" checkout at Fresh & Easy.

The California State Senate is set to vote on AB 183, which if passed in the legislative body and signed into law by Governor Jerry Brown will ban the sales of alcoholic beverages at self-service checkouts in retail stores in the Golden State, before the week is out.

In its official language, AB 183 prohibits holders of off-sale beer, wine and liquor licenses from selling alcoholic beverages using a customer-operated checkout stand located on the licensee's physical premises. [You can read the legislative analysis here.] In other words, any purchase of alcohol will require a face-to-face interaction with a store clerk if the bill becomes law in the Golden State.

Friday, September 9 is the last day of the current legislative session, and the last day both houses of the California State Legislature can vote on and pass bills in the session before it recesses until January 4, 2012.

A simple majority, 21 votes, is needed for AB 183 to pass in the California State Senate.

The bill, which originated in the California State Assembly (hence the AB designation), passed by a 48-to-26 majority in that body on May 26 of this year.

Based on our analysis, AB 183, which is authored by Assemblywomen Fiona Ma (Democrat-San Francisco), has enough votes (with a few to spare) to pass in the California State Senate.

If we're correct and the bill passes by the end of Friday's session, AB 183 will then be sent to Governor Jerry Brown, who like Ma and the majority of the bill's backers in both houses is a Democrat.

If the Governor receives AB 183 by the end of legislative business Friday, he has until October 9 to either sign or veto the bill.

If AB 183 doesn't pass or for some reason isn't voted on in the California State Senate by Friday, it will be dead for this legislative session.

If we're correct and AB 183 passes in the California State Senate this week, the opponents of the legislation, which include Tesco's Fresh & Easy Neighborhood Market, the California Grocers Association and others (see the lists at the end of this piece), will then need to stage a last-ditch effort to persuade the Governor to veto it by the October 9, 2011 deadline.

Governor Brown hasn't spoken out publicly in favor of or against AB 183, which isn't surprising since as the chief executive of the state with the second-highest unemployment rate (12.2 %) in the nation (after Nevada) and a huge budget deficit, he has bigger fish to fry than the self-service checkout booze ban legislation.

However, based on our reporting and analysis, we believe the Governor is leaning towards signing the self-service checkout booze ban bill by an about 60% (sign) to 40% (veto) margin, which is far from the slam-dunk many of its supporters thought would be the case earlier this year.

'Tesco Fresh & Easy Law'

Legislation to ban sales of alcoholic beverages at self-service checkouts in retail stores in California was first authored in 2008. That bill, AB 523, failed to make it out of the California State Senate.

In 2010 another bill, AB 1060, passed both houses of the California State Legislature but was vetoed by then Governor Arnold Schwarzenegger.

We nicknamed the two bills, both authored by Assemblyman Hector De La Torre (D-South Gate, Southern California) and backed primarily by the United Food and Commercial Workers (UFCW) union, the "Tesco Fresh & Easy Law" because if either bill had become law it would have affected Tesco's Fresh & Easy Neighborhood Market more directly than any other retailer in California since it's the only chain we've been able to find that offers self-service checkout only at its 128 stores in the Golden State.

Tesco has 177 Fresh & Easy stores, all of which offer self-service checkout only, or what the grocer calls "assisted checkout" because if asked a store worker will assist shoppers with the checkout process. The 49 remaining Fresh & Easy stores are located in metropolitan Las Vegas, Nevada (21 units) and metro Phoenix, Arizona (28 stores.)

Enter 'Son of Tesco Fresh & Easy Law'

But just when Tesco's Fresh & Easy Neighborhood Market thought it might be able to catch a break following the 2010 veto, San Francisco Assemblywoman Fina Ma, who's also the Speaker Pro Tempore of the California State Assembly, the second highest leadership position, introduced what we've nicknamed the "Son of Tesco Fresh & Easy Law," AB 183, in late January of this year.

This time around Ma and the bill's supporters have done two things De La Torre didn't: Built a much broader coalition in favor of the legislation, which includes numerous law enforcement organizations, and downplayed the UFCW union's involvement in AB 183.

For example, in 2008 and again in 2010 the UFCW was front-and-center in touting the self-checkout booze ban legislation. This time around the union has remained largely in the background, although as we've noted in our coverage of AB 183 it's a key supporter of the legislation.

The support particularly of law enforcement will be key if as we've said AB 183 passes this week in the California State Senate.

On one side the California Grocer's Association, California Chamber of Commerce and other opponents will be attempting to bend the Governor's ear, asking him to veto the self-checkout booze ban bill.

But on the other hand, in addition to the UFCW union and the powerful MADD (Mothers Against Drunk Driving) organizations, there will also be numerous California law enforcement organizations who argue that allowing sales of alcohol at self-service checkouts makes it easier for minors to purchase alcoholic beverages in stores, even though there's little empirical evidence to support the position, including that offered in the official legislative analysis of AB 183

A number of these law enforcement groups supported AB 1060 last year. But this year they've been much more vocal in their collective support. Supporters have also added many more law enforcement groups to the list of supporters.

As such, it will be difficult for the Democratic Governor to veto AB 183, as the forces behind it - important Democrat legislators and allies like Ma and others, the unions, MADD and law enforcement organizations statewide - make for a rather potent combination for Brown to buck should he want to veto the bill, which in practice will only directly affect one retailer in California, Tesco's Fresh & Easy Neighborhood Market.

But the Governor is unpredictable and has been known to buck what is often seen as conventional political wisdom, such as he did earlier this year when he vetoed the card check bill passed in the legislature which would have allowed farm workers in California to vote on unionization by filling out a card rather than using the traditional secret ballot voting process. The legislation though had much more riding on it for the Governor and the state than does AB 183, which most residents of California have little idea of, and if they do care little about.

We should know before or by Friday if AB 183 has passed in the California State Senate, as our analysis suggests will be the case, and is then sent to the Governor for his signature or veto. Stay tuned.

Key Supporters of AB 183

California Police Chiefs Association (co-source)
California Professional Firefighters (co-source)
Mothers Against Drunk Driving (co-source)
Association for Los Angeles Deputy Sheriffs
California Association of Addiction Recovery Resources
California Association of Alcohol and Drug Program Executives, Inc.
California Association of Alcoholism and Drug Abuse Counselors
California Council on Alcohol Problems
California Labor Federation
California Narcotic Officers' Association
California Nurses Association
California Teamsters Public Affairs Council
City and County of San Francisco Police Department
Consumer Federation of California
County Alcohol and Drug Program Administrators Association of California
Los Angeles County Probation Officers Union
Marin Institute
Riverside Sheriffs' Association
United Food and Commercial Workers Union
Western States Council of the United Food and Commercial Workers

Key Opponents of AB 183

California Chamber of Commerce
California Grocers Association
California Hispanic Chambers of Commerce
California Independent Grocers Association
California Manufacturers and Technology Association
California Retailers Association
Central City Association of Los Angeles
Information Technology and Innovation Foundation
Los Angeles Area Chamber of Commerce
National Cash Register Corporation
Neighborhood Market Association
Tech America
Valley Industry and Commerce Association 

Source: State of California Legislative Analyst's Office

California Legislation to Ban Alcohol Sales at Self-Service Checkouts: Follow the Story at the Links Below

August 20, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill AB 183 Passes Out of California Senate Appropriations Committee; Headed For Senate Floor

July 27, 2011: 'Son of Tesco Fresh & Easy Law' Moving Through State Senate: Will California Determine Fresh & Easy Neighborhood Market's Checkout Scheme?

June 4, 2011: 'Son of Tesco Fresh Easy Law': Self-Checkout Booze Ban Bill AB 183 Sails Through California State Assembly; State Senate Next Stop

May 11, 2011: ‘Son of Tesco Fresh & Easy Law' - California Assembly Appropriations Committee Passes Self-Checkout Ban Bill AB 183 By 12-4 Margin

May 6, 2011: 'Son of Tesco Fresh & Easy Law': California State Assembly Appropriations Committee Hearing For AB 183 Cancelled

May 4, 2011: 'Son of Tesco Fresh & Easy Law': Strong Chance California Legislation to Prohibit Alcohol Sales at Self-Service Checkouts Could Pass This Year

September 30, 2010: Fresh & Easy Neighborhood Market Hopes Governor Scharzenegger Can Find His Veto Pen Before Midnight Tonight

September 28, 2010: Fresh & Easy Neighborhood Market Hoping Governor Schwarzenegger Prefers His Veto Pen When it Comes to AB 1060

September 25, 2010: Future of Fresh & Easy Neighborhood Market's Self-Service-Only Checkout in California Up to Governor Schwarzenegger

August 24, 2010: California State Senate Sends Bill to Governor That Could End Self-Service-Only Checkout at Fresh & Easy Neighborhood Market

August 15, 2010 piece : Bill to Ban Alcoholic Beverage Sales at Self-Service Checkouts Would End 'Self-Service Only' at California Fresh & Easy Neighborhood Market Stores

July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages.

Tesco Opens Long-Awaited Fresh & Easy Neighborhood Market Store in San Francisco's Bayview-Hunters Point Neighborhood

Nearly four years in the making, Tesco opened its Fresh & Easy store (above) in San Francisco's Bayview-Hunters Point neighborhood yesterday. [Photo credit: Fresh & Easy Buzz.] Kevin, a Fresh & Easy Buzz reader who lives in Bayview-Hunters Point, e-mailed us this review (in the quotes below) he posted on the Yelp review site shortly after the store opened yesterday: "It's open. First new grocery store in the Bayview in decades; and it's a grand success. Organic offerings throughout the store - fresh, beautiful stuff. A true full-service grocery store, even offering a full line of wine & spirits. The Bayview in all it's multi-cultural glory is on display here - throngs of happy, smiling people mingling, laughing and honestly joyous about this long-awaited addition to the neighborhood. The staff is helpful and thoughtful - eager to help."

Tesco opened its long-awaited Fresh & Easy Neighborhood Market fresh food and grocery store in the 5800 Third Street condominium development at 3rd Street and Carroll Avenue in San Francisco's Bayview-Hunters Point neighborhood yesterday, completing a nearly four-year process that began when the retailer announced its plans in January 2008 to open a store in the low-income neighborhood underserved by grocery stores that offer a selection of fresh food and groceries at affordable prices.

The opening of the Fresh & Easy store yesterday - Tesco's second unit in San Francisco, 13th store in Northern California, 128th market in California and store number 177 in total - at 3rd Street and Carroll Avenue in San Francisco's Bayview-Hunters Point kicked off at a 10 a.m with presentations by Tim Mason, the CEO of Fresh & Easy Neighborhood Market and deputy CEO of parent company United Kingdom-based Tesco (pictured below), San Francisco Mayor Edwin Lee, David Chiu, president of the San Francisco Board of Supervisors, Malia Cohen, who represents the neighborhood on the board, and Sophia Maxwell, who formerly represented the area on the San Francisco Board of Supervisors and was instrumental in getting the grocer to locate a store in the new 5800 Third Street development, which opened early this year.

Mayor Lee, who is being challenged next year for the city's top elected office by Chiu and numerous others, presented a check for $1,000 to the Bayview-Hunters Point YMCA, which was chosen by the employees of the store to receive the donation Fresh & Easy gives to a local non-profit group each time it opens a new store, while the other San Francisco politicos, Mason and members of his senior executive team encouraged him on.

"I made a commitment to the community to improve Bayview-Hunters Point and make it a place that is safe and healthy for families," Mayor Lee said during his presentation this morning. "This project is a cornerstone in our broader efforts to revitalize the neighborhood by bringing healthy food, vibrant businesses, and new shoppers to Third Street."

Lee is San Francisco's former chief administrator, which is a non-elected position. He was appointed by the San Francisco Board of Supervisors early this year to fill the remaining term of then mayor Gavin Newsom, who was elected California's Lieutenant Governor in November 2010 and took office in January 2011.

It was during Newsom's term as mayor, in 2007, that Tesco agreed to locate a store in the 5800 Third Street development, which at the time was a vacant piece of land and the site of a former Coca-Cola bottling plant.

At the time of his appointment - and up until a few weeks ago - Lee said he would not run for mayor in 2012. However he recently announced he will run for the top office in the city and is being supported by local political heavyweights like Senator Dianne Feinstein and former San Francisco Mayor and California State Assembly Speaker Willie Brown. Both Feinstein, also a former mayor, and Brown are long time residents of and political players in San Francisco.

It was during Brown's two terms as mayor that the city's long-delayed plans to revitalize the low-income Bayview-Hunters Point District began to take shape

As mayor, San Francisco first African American to be elected to the office, Brown pushed through a plan to extend San Francisco's Muni light rail system into the historically majority-African American Bayview-Hunters Point  neighborhood, which previously had been neglected by most elected officials at City Hall, although Brown's close friend, former Mayor George Moscone, who was assassinated in the 1980's along with Supervisor Harvey Milk by another then-Supervisor, Dan White, made some efforts during his tenure to improve the neighborhood. Feinstein, who was President of the Board of Supervisors at the time, replaced Moscone as mayor, then later went on to become one of California's two U.S. Senators.

Above and below: Shoppers browse the aisles yesterday. [Photo credit: Fresh & Easy Buzz.]

The extension of Muni into Bayview-Hunters Point - there's a major stop right in front of 5800 Third Street where the Fresh & Easy store is located - paved the way for what is becoming a slow but steady revitalization of the neighborhood, which was essentially created during World War two when shipyards were built in the area to build ships for the two-front war effort in Europe and Japan, which created numerous jobs at the time.

Post-World War II  Bayview-Hunters point has seen a steady decline in income and opportunities for its 35,00-40,000 residents. Part-and-parcel of this phenomenon has been a lack of grocery stores in the neighborhood, which is considered a "food desert."

Newsom, who was supported by Brown and replaced him as mayor, continued to put a focus on Bayview-Hunters Point during his nearly two terms in office. That focus included working with former supervisor Maxwell and others to bring the 5800 Third Street development to Bayview-Hunters Point along with the Fresh & Easy store, which Tesco owns rather then leases.

Ironically, when it comes to grocery chains - there is a Foods Co discount warehouse grocery store owned by Kroger Co. located in Bayview-Hunters Point - local chains like Safeway Stores, Inc., which is headquartered just 30 miles from San Francisco in Pleasanton and is the leading food retailer in San Francisco with 14 supermarkets, weren't interested in the neighborhood. Instead, the grocer from across the pond, Tesco, ended up being the first grocery chain to open a new store in Bayview-Hunters Point in two decades. It was about 20-years ago when the Foods Co store was opened in the neighborhood.

About 200 customers, according to our count, attended the grand opening during its opening couple hours, including numerous residents of the 5800 Third Street development who told us they were extremely pleased to finally have the Fresh & Easy store open so they can do their grocery shopping on-site.

Along with the customers, about a dozen protesters attended the store opening, including those representing the United Food & Commercial Workers (UFCW) union (Fresh & Easy is non-union) and a neighborhood group, Clergy & Laity United for Economic Justice, that has asked Tesco's Fresh & Easy to remove alcoholic beverages from the store.

The group is also protesting about the fact that Fresh & Easy Neighborhood Market doesn't except WIC Vouchers in any of its stores besides a single unit in South Los Angeles, which is a story Fresh & Easy Buzz has been in the lead about since early 2008.

Fresh & Easy's CEO Mason however says the grocer has applied to except WIC Vouchers at the store in Bayview-Hunters Point (which is something we first said here in 2008 the grocer should do when it opened the store) and plans to start excepting the vouchers, which provide fresh and healthy foods to mothers for their children, soon.

The Clergy & Laity United for Economic Justice supports AB 183, which as we've reported extensively about would if passed by the California State Senate and signed by Governor Jerry Brown banned the sales of alcoholic beverages at self-service checkout lanes in retail stores in California. Tesco's Fresh & Easy uses an all self-checkout model in its 177 stores in California (128 stores), metropolitan Phoenix, Arizona (28 units) and metro Las Vegas, Nevada (21 stores).

Reverend Carol Been, a senior organizer for the group, says though that the organization is going a step beyond AB 183 and wants Fresh & Easy to stop selling alcoholic beverages entirely in the Bayview-Hunters Point store, siting among other reasons the alcohol-infused violence that broke out during last Saturday's football game at nearby Candlestick Park (about a mile away from the store) between the San Francisco 49ers and the Oakland Raiders.

Numerous stores in the neighborhood sell alcoholic beverages, as does the ball park itself. For example, according to the City of San Francisco's Economic Development Department their are about 90 liquor stores operating at present in Bayview-Hunters Point.

Therefore its unlikely Tesco's Fresh & Easy will remove the adult beverages from its shelves just because it's being singled out by the group for such action. The grocer went through the full process of obtaining an alcoholic beverage license, which was granted to it by the State of California. The City of San Francisco didn't object to the granting of the license either, which municipalities have a right to do in California.

The neighborhood group says its singling out Fresh & Easy to remove alcoholic beverages because of its self-service only checkout policy. However, if AB 183 does become law, it will likely make that a moot point because as the legislation is currently written it would require the grocer to at a minimum have one full-service checkout in each of its California stores because the bill, which we've nicknamed the "Son of Tesco Fresh & Easy Law," requires face-to-face interaction between a store clerk and customer whenever alcohol is purchases.

The group also says Fresh & Easy didn't hire locally for the Bayview-Hunters Point store. However, the grocer actually hired 40 employees for the store, which is almost double the number (20-25) it normally hires to staff one of its small-format grocery markets.

In addition, Mason said yesterday - and he told the same thing to Mayor Edwin Lee - that 52% of the 40 store employees are from the Bayview-Hunters Point Neighborhood. Additionally, earlier this year Fresh & Easy held a job fair at the neighborhood YMCA, which it donated $1,000 to yesterday, which is where many of those employees were hired from.

Above: The bakery department in the Bayview-Hunters Point store, which includes an oven where fresh breads and pastries are baked in-store. Fresh & Easy started adding the in-store bakeries to its existing 176 stores in July. All new stores will include the departments. We broke the news about the in-store bakeries in this May 18, 2011 piece. Below: Frozen foods in the 3rd Street and Carroll Fresh & Easy store are displayed in upright cases with glass doors. This is another change for the grocer, which is replacing the reach-in frozen food cases in its stores with the more modern units, which is also news we broke in the May 18 piece.

From a business perspective the hiring of 40 employees instead of the 20-25 Fresh & Easy normally hires per-store is difficult to understand. We've predicted the Bayview-Hunters Point store will be one of the grocers top stores in terms of average weekly sales. However, it doesn't need 40 employees to staff it in our analysis. All of Fresh & Easy's store workers are part-timers, working 20-35 hours week, accept for the store managers, assistant managers and team leaders, although in some cases they too work part time.

The grocer way be creating a potentially damaging situation for itself in hiring so many workers for the store in that (1) it could likely result in the workers getting fewer hours - they get health benefits if they work 20 hours or more a week - and even more serious could be that (2) Fresh & Easy will find itself to high of a labor expense number at the store down the road a bit and have to layoff some of the 40 employees, which will likely lead to damaging its reputation in the neighborhood.

Mason also made a little news at the opening, saying the grocer plans to open its third store in San Francisco - the unit at Silver Avenue & Goettingen in the Portola District which like the Bayview-Hunters Point store it acquired  in late 2007 and announced in January 2008 - in early 2012, confirming our previous reports that it would be the next Fresh & Easy store to open in the city.

As we've previously reported, Fresh & Easy also has a fourth store in the works in San Francisco. That unit will be in the former Delano's IGA Market store at 1245 South Van Ness Avenue in the city's Mission District. Based on our current information we expect that store to open in early-to-mid 2012. (See here for details.)

Tesco is also looking for additional locations in San Francisco for both its 10,000 square-foot Fresh & Easy stores as well as for its smaller footprint (3,000-4,000 square-foot) new "Fresh & Easy Express" format, as we've previously reported.

We've been reporting on and writing about Tesco's plans to open a Fresh & Easy market at the Bayview-Hunters Point location since the grocer first announced its intention to do so in January 2008. We said then and still suggest it will be one of the top performing Fresh & Easy stores in the chain.

In our analysis it should be among the top 10%-15 in average weekly sales among the current 177 stores in operation in California, Nevada and Arizona. Additionally, excepting WIC Vouchers at the store will in our analysis provide at least 5%-10% more sales than if the grocer doesn't except the vouchers, which is currently the case at the store, as it is with all but one of the Fresh & Easy markets, the unit in South Los Angeles.

If we're right, and we believe we are, that's good news for Tesco. But the United Kingdom-based global retailer will need much more than a good location in Bayview-Hunters Point in order to achieve its goal of breaking-even with Fresh & Easy Neighborhood Market, which it lost about $300 million on in its latest fiscal year ended in February 2011, by the end of its 2012/13 fiscal year, which is just 18 months away.

That's something we will continue to explore in Fresh & Easy Buzz in the coming months. Stay tuned.

Related Stories

>We've reported on and written extensively about the Fresh & Easy store at 5800 Third Street in San Francisco's Bayview-Hunters Point Neighborhood. Click on these link - 5800 Third Street, Fresh and Easy San Francisco Bay Area, Fresh and Easy Northern California - to read those stories and analysis.

>We were the first publication to point out that Tesco's Fresh & Easy doesn't except WIC Vouchers in its stores. Following our extensive reporting and analysis, which included a focus on the store in South Los Angeles, the grocery chain began excepting the vouchers in that store. We also first said in a couple stories in 2008 (and since then) that Fresh & Easy would be making a mistake and missing an opportunity if it didn't except the vouchers in the Bayview-Hunters Point store when it opens. You can read those stories at these links - WIC Vouchers, California WIC, Central and Adams Fresh and Easy, Fresh and Easy 1025 East Adams South LA, Fresh and Easy Central Valley, Fresh and Easy Southern California.

>AB 183 is the latest of three legislative bills in California that beginning in 2008 have been designed to ban the sale of alcoholic beverages at self-service checkouts in grocery and other retail stores in the GOlden State. We've reported on and written extensively about the legislation, including a recent piece last week. See those stories at this link - AB 183.

[Editor's Note: Photo of Tim Mason courtesy Fresh & Easy Neighborhood Market.]