Food Lion - History

History

Food Lion was founded in 1957 in Salisbury, North Carolina as Food Town by Wilson Smith, Ralph Ketner, and Brown Ketner. The Food Lion name was adopted in 1983, several years after Belgium-based grocer Delhaize acquired the Food Town company. The name change, while puzzling for American customers, made economic and historic sense for Delhaize. Once known as "Delhaize Le Lion," the Belgian company was able to re-brand its new American subsidiary by changing just two letters on the "Food Town" signage.

Throughout the 1980s, Food Lion expanded throughout the Mid-Atlantic and Southeastern United States, succeeding where many supermarket stalwarts weren't. When names such as A&P, Grand Union, Colonial/Big Star and Piggly Wiggly disappeared from Southern communities, Food Lion remained. The company continued their expansion throughout the late 1980s, opening hundreds of stores in existing markets such as the Carolinas and Virginia, and entering new markets such as Georgia, West Virginia, Kentucky, Tennessee and Maryland.

In the early 1990s, Food Lion stores appeared in new markets such as Delaware and southern Pennsylvania; Orlando, Florida; Oklahoma City and Tulsa, Oklahoma; Shreveport; the Dallas/Fort Worth Metroplex; and Houston and Tyler, Texas. During this time, the chain was the fastest-growing supermarket company in the U.S., as they opened over 100 new stores each year. In November 1992, a critical PrimeTime Live report that showed unsanitary handling of meat and seafood hurt the chain as they attempted to enter new markets in the Northeast and Southwest. (See ABC PrimeTime Live section, below.)

According to some industry sources, the new stores in Texas, Louisiana, and Oklahoma were already operating below sales projections. The small, lackluster Food Lion stores were competing with national retail leaders such as Albertsons, Kroger, Tom Thumb, and Jewel-Osco—all of which were already well respected in the Southwest and which operated larger stores with more features. Additionally, the effects of the devastating ABC report could not be denied, and sales and revenue plummeted. In the Dallas/Fort Worth Metroplex there were widespread reports of stores sending half their staff home early due to lack of business and of other stores with "virtually zero meat sales". In the fiscal quarter that included the Thanksgiving and Christmas holidays of 1992, Delhaize America reported company-wide same-store sales declines of 9.5%. As a result, Food Lion was forced to greatly scale back expansion plans in Texas and Oklahoma, as well as delay their planned entry into new markets in Missouri, Kansas, and Illinois.

In 1993, Food Lion agreed to pay $16.2 million to settle claims that they violated federal laws regulating unpaid overtime, minimum wage and child labor, according to the U.S. Department of Labor. In the agreement, which at the time was the largest settlement ever from a private employer accused of violating the Fair Labor Standards Act (FLSA), the grocery chain agreed to ensure that all employees would be well-informed about their rights. Additionally, the Labor Department said Food Lion's top management provided assurances that no retaliatory action would be taken against employees who filed complaints about unpaid overtime or other potential FLSA violations.

On January 7, 1994, Delhaize announced the first major round of store closings in what would become a yearly event. The stores to be closed included 47 of its brand-new stores in Texas and Oklahoma as well as stores in Florida, Georgia, Kentucky, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia.

Throughout the mid-to-late 1990s, the company canceled leases for new stores and closed scores of its newly built outlets in recently established markets such as Dallas/Fort Worth, Houston, and Oklahoma City. Citing double-digit same-store sales declines for the quarter ending in September 1997, Delhaize announced that it was canceling its Midwest expansion, exiting all markets in Texas, Oklahoma, and Louisiana, and closing its 6-year-old distribution center in Roanoke, Texas. A bruised and battered Food Lion was forced to recede back to the East Coast, where it faced increasing competition from competitors with larger stores, better customer service, and more variety and amenities; these included regional winners such as Ingles, Harris Teeter, and Publix; newcomers like specialty retailer Whole Foods Market; and expanding national chains such as Kroger, Target and Wal-Mart Supercenters.

Beginning in 2003, Food Lion became active in "market renewals" in which every year Food Lion picks certain cities in their operating area where they remodel stores and update the product offerings. In 2006, Food Lion advanced their market renewals program by using in-depth demographic and geographic data to figure out whether certain stores should be branded as Food Lion, Bloom, or Bottom Dollar. Should the data support that an already existing Food Lion is adequate for a certain community, the location will simply be remodeled. Should the data support otherwise, the Food Lion store will be remodeled and re-branded as either Bloom or Bottom Dollar.

On January 12, 2012, Food Lion announced it would be closing 113 under-performing stores, including all Florida and Kentucky stores, and re-branding some others as part of their new market strategy.