Chicago’s biggest local grocery store chain may buy out the supermarket that’s been central to Northwest Indiana life for nearly six decades.
Jewel Food Stores wants to buy Strack & Van Til's 19 remaining stores for about $100 million, according to a Chapter 11 bankruptcy filing in a Delaware court. Jewel Food Stores offered to pay $70 million for the supermarkets plus an estimated $30 million for the inventory that's left in the stores when the sales go through.
It would buy Strack & Van Til out of bankruptcy court as its owner, Joliet-based Central Grocers, goes under, succumbing to $225 million in debt. Strack & Van Til is closing another 14 stores this year, mainly in Illinois, that Jewel wasn't interested in.
Whether the well-established Strack & Van Til brand will live on or the stores will be converted to the Jewel-Osco brand was not immediately clear. A Jewel spokeswoman could not immediately be reached for comment.
Officials from Jewel-Osco and its parent company Albertsons have not returned messages over the past week.
Strack & Van Til parent company Central Grocers, a century-old co-op that acquired the Region’s biggest grocery chain in the late 1990s and will soon go entirely out of business as it winds down in bankruptcy court, is selling off its remaining Strack & Van Til, Ultra Foods and Town and Country supermarkets across Northwest Indiana. Another buyer could swoop in and buy the stores out of bankruptcy court if it files a better bid by a June 21 deadline.
Central Grocers said in the bankruptcy filing it received six bids for the Strack & Van Til stores that accounted for about half of its $2 billion-a-year business and the 930,000-square-foot distribution center it operates in Joliet. Jewel is not buying the distribution center, which is slated to close, putting 550 people out of work.
Jewel is a subsidiary of Albertsons, a Boise, Idaho-based company with 2,200 stores and more than 250,000 employees nationwide. The Itasca, Ill.-based chain owns more than 180 stores throughout the Chicago area. It's trying to acquire Strack & Van Til as a "stalking horse bidder," which is when a bankrupt company selects a buyer so stakeholders don't get shortchanged by low bids in an auction.
The 58-year-old Highland-based Strack & Van Til chain, which once had 38 stores across Northwest Indiana and the south suburbs, reported $1.1 billion in revenue and $12.5 million in profit in 2013. At the time, Strack & Van Til had just opened a new grocery store in Cedar Lake and was about to pump millions of dollars into capital projects to renovate and modernize several stores, including Schererville, Munster, Highland, Valparaiso and the Lansing Ultra, which is now closing along with 13 other locations.
Its business has lagged over the last few years as it struggled with the worst food price depreciation in decades in a sector known for razor-thin margins. It also faced increased competition from rivals like Whole Foods, Ruler Foods and online players, such as home meal delivery services. Strack & Van Til's gross revenue had fallen to around $900 million last year, according to a filing in bankruptcy court.
After its parent company filed for Chapter 11 bankruptcy, Strack & Van Til phased out its 10 percent senior discount last week, according to signs posted at stores.
Widely considered the Chicago area's grocer, Jewel bought several shuttered Dominick's stores when that long-standing chain closed in late 2013. It reopened some of them as Jewel stores.
Jewel has long had a presence in Northwest Indiana, with stores in Munster, Dyer, Crown Point and Chesterton. It has closed failed locations in the Region, including at the Highland Grove Shopping Center and at 45th Street in Highland near the flagship Strack & Van Til that Ernie Strack and Nick Van Til opened in 1959.
Jewel also has locations that are close to existing Strack & Van Til stores, with less than a mile between the Munster Jewel and the Munster Strack & Van Til, both on Ridge Road and only a few miles between the Dyer Jewel on U.S. 30 and the Schererville Strack & Van Til at U.S. 30 and Indianapolis Boulevard.
Strack & Van Til currently employs around 4,000 workers, making it one of the largest employers in Northwest Indiana. Many of the union jobs may be retained.
“Additionally, and importantly, the Stalking Horse Bidder has agreed to interview and extend offers of employment to substantially all of the Covered Employees employed at the Strack Stores in the Stalking Horse Package,” Central Grocers said in the bankruptcy filing. “The Stalking Horse Bidder also has agreed to negotiate in good faith with the affected unions representing Covered Employees to achieve collective bargaining agreements and other labor contracts that are acceptable to the Stalking Horse Bidder and consistent with the terms of its current agreements with the Affected Unions.”
The extent of the impact of the supermarket chain’s closing in Northwest Indiana remains to be seen. Strack & Van Til had been a major sponsor of local nonprofits, a big patron of youth sports and a significant advertiser in local media.