Word on the street was that once Dominick’s got its labor problems patched up, Safeway Inc. could once again seek a buyer for its beleaguered Chicago supermarket chain.
Instead, tension is building between Dominick’s and members of Teamsters Local 703, whose more than 500 warehouse workers and truck drivers have been working under a contract extension since April when the old one expired.
“Both sides are working on an agreement,” said a Dominick’s spokeswoman. A union representative didn’t return phone calls Friday.
Without labor peace, Dominick’s is stuck like an odd piece of fruit, unable to draw the attention of would-be buyers.
“Nobody is going to look at them until the labor situation is cleared up,” said a source at a private equity firm that is watching the situation.
Last year, when Safeway put Dominick’s up for sale, the company claimed that failure to reach an agreement with the United Food and Commercial Workers killed a deal to sell Dominick’s to another firm, believed to be Eden Prairie, Minn.-based Super Valu.
As a result, Safeway pulled Dominick’s off the sales block.
But the negative publicity surrounding the union fight and the sale took its toll on Dominick’s, once a worthy competitor to market leader Albertson’s-owned Jewel Food Stores.
Dominick’s sales fell as uncertainty about its future ownership motivated customers to shop elsewhere.
Since the problems surfaced late last year, its market share decline has stabilized. But Dominick’s doesn’t seem to be in a hurry to expand rapidly anytime soon in Chicago even as the market remains attractive to new players.
Suds are flying: Chicago’s best-known local brewery, Goose Island Brewing Co., is locked in a nasty legal fight with its former distributor, who claims that the brewery’s finances are shaky.
United States Beverage LLC sued Goose in Cook County Circuit Court, claiming that the brewer unfairly terminated its relationship with the distributor earlier this year.
Goose, whose best-selling brand is Honker’s Ale, operates a brewpub in Wrigleyville and a small West Side brewery. Goose’s flagship microbrewery at 1800 N. Clybourn Ave. is owned separately by Goose founder John Hall.
In its suit, USB says that Goose Island’s business has diminished and that it will lose its $2.55 million credit facility with LaSalle Bank effective in October. The brewery confirmed that its relationship with LaSalle is ending, but Hall said it is about to sign on with a new lender and disputed USB’s assertions that it is in financial trouble.
Still, the suit gives a rare glimpse into the challenges facing small brewers as they fight for drinkers in the slow-growing microbrewery industry. According to Information Resources Inc., Goose Island had a 29 percent share of the Chicago microbrew market last year, but sales slipped 7.4 percent, to $2.15 million. Its market share slipped more than 3 percent. (The figures don’t include on-premise beer sales.)
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Hall said Friday that the company this year was growing “double digits” and that he expected to have a good year. It also helps that most Cubs games are sold out and the Wrigleyville location is doing well.
Much of this fight is about who didn’t do their part in building the business.
USB signed on as Goose’s distributor in 2000, paying Goose $1 million. USB also says that it agreed to bring in other subcontracting deals to help bring in more revenue. So USB invested $500,000 more into Goose’s facilities so that it could begin producing Hooper’s Hooch, a malt beverage.
Hall said it was USB’s promise that Hooper’s would be a huge seller and would help utilize excess brewing capacity at its West Side plant. But Hooper’s Hooch production never reached expected levels.
“That really hurt us from a business standpoint,” Hall said.
According to the suit, by November 2003 Goose complained of financial problems and “requested more production business from USB.” So USB moved production of its Slo beer brand to Goose.
On April 2, Goose sent a letter to USB stating that it was terminating the contract with USB in 90 days, saying that USB didn’t live up to its end of the bargain.
Hall maintains Goose is close to agreements with other companies to make up for the lost production.
Harmon retires (quietly): In media circles in Chicago and New York, Bill Harmon’s name carries clout that few executives could match.
For five decades, Harmon has been a staple on invitation lists of publishers and media elite to countless parties, trips and dinners all wanting his attention–and his client’s advertising money.
One would have expected a huge send-off retirement party. But that’s not what happened.
Harmon quietly retired late last month from Starcom USA, telling only a few close confidants at the agency that he was hanging it up after 51 years.
It was a muted career ending for a media director–first at Leo Burnett and most recently at its spinoff Starcom–who has taught hundreds of media sellers the ins and outs of business in Chicago. He was one of the few remaining at 35 W. Wacker to have worked with late founder Leo Burnett.