AppleTree Markets

AppleTree Markets was a supermarket chain in Texas formed in 1969 when Safeway opened its first stores in Houston, which were spun off under the AppleTree name in 1988. The division once had 100 stores in Greater Houston and Greater Austin. By January 21, 2002, AppleTree had reduced its holdings to two stores in Bryan, Texas, where it had shifted its headquarters. One of the remaining locations was sold in 2009 and the final location, in Bryan at Highway 21 and Texas Avenue, closed in early 2012, marking the end of the chain.

History

Safeway

Safeway put its 18-year-old Houston division up for sale in 1988 in an effort to raise money to pay off debts from a $4 billion leveraged buyout in 1986.[1] On June 14, 1988, Safeway agreed to sell its Houston division to Texas Supermarkets Inc., a holding company formed by local investors Duncan Cook & Co. and the Sterling Group. The deal included 50 stores in Houston, 20 in Austin, stores in 23 other communities in East and Central Texas, along with a distribution center, frozen food warehouse, bread manufacturing plant and milk processing plant.[2] At the time of the $174 million transaction, Safeway's 18 percent market share ranked third in the Houston market behind Kroger, with 27 percent, and Randall's Food Markets, with 21 percent.[3] M. Dean Gantt, the former Houston division manager, assumed the position of president and chief executive officer of Texas Supermarkets Inc., which initially owned only eight of the stores from the transaction and leased the rest from Safeway.[3] Texas Supermarkets was allowed to operate under the Safeway banner until June 28, 1989, but it would continue to do so until a new name began appearing in July 1989—AppleTree Markets.[4] Five stores were renamed Budget Stores, stores with slightly lower prices on some items and fewer specialty shops such as delis, bakeries, and floral shops. The last of the Safeway banners was replaced in September 1989.

Gantt retired abruptly in October 1989 and was replaced a month later by Arthur L. Patch, senior vice president of Dublin, California-based Lucky Stores Inc.[5]

Bankruptcy

The company struggled with the debt that originated from the 1988 leveraged buyout out Safeway's stores.[6] After failed attempts to restructure that debt,[7][8][9] AppleTree sought Chapter 11 bankruptcy protection in 1992.[10] Soon after the filing, AppleTree announced its plans to begin closing stores.[11] Arthur Patch resigned his post in March 1992, and the chairman of the company's board, Fred R. Lummis, took the helm.[12] Also a growing problem was the chain's aging store base. The bulk of Safeway units in Houston dated from the late 1960s and early 1970s, and a logo change in 1981-1982 was the only alteration, if any, to most of such stores before the AppleTree split. Many former Weingarten's stores, which had been acquired by Safeway in 1983, were even older. A very small minority of Houston Safeways were built in 1986, but these were larger and had a more modern, conventional prototype. This was in contrast to the reinvention of Super Fresh beginning in the early 1990s, a chain which itself was spun off from A&P's Philadelphia division in 1982. Also in Philadelphia, many A&P as well as Acme and Food Fair (doing business as Pantry Pride in its later years, and not related to the current Houston chain of the same name), and Penn Fruit (acquired by Food Fair during the same period) stores closed and reopened as IGA and related chains Thriftway, Shop 'n Bag, O&O, Pick Well, Great Valu (SuperValu), and ShopRite. Philadelphia retail icon Thrift Drug was also absorbed into Eckerd in 1997, but many of its stores were relocated or closed soon after.

To cut costs and raise cash, AppleTree continued to close stores or sell its stores to competitors such as Fiesta Mart, Gerland's Food Fair, and Market Basket.[13][14] The company would also look to move its headquarters to a smaller facility,[15] as well as close its distribution warehouse.[16] AppleTree formerly had its headquarters in the Spring Branch area and in Houston.[17][18]

In its reorganization plan, AppleTree announced plans to close or sell 33 additional stores.[19][20][21][22] Ultimately, AppleTree announced in November 1993 it would sell its remaining 49 stores to competitors.[23][24][25][26] Randall's Food Markets acquired eleven locations in Greater Austin and three in Greater Houston. Eleven stores were sold to Kroger, five stores to Gerland's, four to Fiesta Mart, three stores to Rice Food Markets, and one store each to Cox's Foodarama, Big Chief Super Markets, Stanley Stores, and Super Warehouse Foods.[27] Some of the former Safeway stores Randall's purchased from AppleTree became part of Safeway once again when Safeway bought Randall's in 1999. One location at 8620 Stella Link became a Sellers Bros.

As a result of the reduction of stores, AppleTree's northwest Houston grocery distribution facility, which included a 119,000-square-foot (11,100 m2) refrigerated warehouse, a large bakery and a major milk plant, was larger than AppleTree's needs. The facility was still owned by Safeway, and it was sold to H-E-B.[28] As a result, AppleTree would buy its dairy products from a supplier and also relocated its headquarters to a building in northwest Houston.

Independent Chain and closing

With the sales, AppleTree would be reduced to six stores; three in Bryan-College Station, two in Houston, and one in Huntsville. AppleTree chief executive Tony Kubicek purchased the last six AppleTree stores and planned to operate the stores as an independent, Houston-based chain bearing the AppleTree name.[29]

However, the chain did not fare well – after closing the lone Huntsville store and one of the two Houston locations, in 1997 AppleTree closed its other Houston location.[30] With the closing, AppleTree operated three stores in Bryan-College Station, where it would eventually relocate its corporate staff.

AppleTree further retrenched to its two Bryan locations after closing its College Station store in 2002.[31] In February 2009, AppleTree sold its Briarcrest Drive store in Bryan to local resident Jim Lewis. Lewis used the location to open a new grocery store, Village Foods and rehired all of the AppleTree employees who'd been left unemployed by the closing.[32][33][34] The final AppleTree location, in Bryan at Highway 21 and Texas Avenue, closed in early 2010.

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References
  1. Bivins, Ralph. "Local firm to buy 99 Safeway stores." Houston Chronicle. Tuesday June 14, 1988. Section 1, Page 1. Retrieved on July 1, 2010.
  2. Bivins, Ralph. "Sale of local Safeways severs Texas ties." Houston Chronicle. Wednesday June 15, 1988. Business 1. Retrieved on July 1, 2010.
  3. Bivins, Ralph. "Safeways drew $174 million/South Texas deal detailed." Houston Chronicle. Friday September 30, 1988. Business 1. Retrieved on July 1, 2010.
  4. Bivins, Ralph. "Texas Safeway stores getting new name." Houston Chronicle. Thursday July 13, 1989. Business 1. Retrieved on July 1, 2010.
  5. "Ex-Safeway exec to head AppleTree." Houston Chronicle. Thursday November 30, 1989. Business 8. Retrieved on July 1, 2010.
  6. Narom, Beverly and Cynthia Shanley. "Supermarkets stocking up for major food fight." Houston Post. April 26, 1992. A1. Available at the Microfilm desk of the Jesse H. Jones Building of the Houston Public Library Central Library. "It had also been no secret that one of the largest Houston operators, AppleTree Markets, had been struggling under the heavy debt load of its 1988 leveraged buyout of Safeway's area stores."
  7. Sixel, L.M. "AppleTree gets $10 million line of credit." Houston Chronicle. Wednesday June 19, 1991. Business 3. Retrieved on July 1, 2010.
  8. Boisseau, Charles. "AppleTree gets $120 million loan." Houston Chronicle. Friday August 23, 1991. Business 2. Retrieved on July 1, 2010.
  9. Proposed AppleTree buyout dissolves, Houston Chronicle, November 26, 1991.
  10. AppleTree files for Chapter 11, Houston Chronicle, January 3, 1992.
  11. AppleTree plans to close five stores, Houston Chronicle, January 31, 1992.
  12. AppleTree chief resigns position/Grocery chain to close five stores, Houston Chronicle, March 21, 1992.
  13. AppleTree selling 8 stores, including 4 in Houston area, Houston Chronicle, April 24, 1992.
  14. AppleTree sells eight more stores, Houston Chronicle, May 28, 1992.
  15. AppleTree to look for smaller home/Current headquarters too big, costly, Houston Chronicle, April 25, 1992.
  16. AppleTree shutting warehouse/Grocery chain to ax 150 workers, Houston Chronicle, May 19, 1992.
  17. "Directors and Executives." Standard & Poor's Register of Corporations, Directors and Executives, Volume 2. Standard & Poor's, 1995. 637. Retrieved from Google Books on July 1, 2010. "Appletree Markets, Inc., 4301 Windfern, Houston, TX 77041."
  18. "Boundary Map." Spring Branch Management District. Retrieved on December 8, 2009.
  19. AppleTree hopes to shed more stores/Reorganization plan would close 33 sites, Houston Chronicle, May 2, 1992.
  20. Japanese may have slice of revamped AppleTree, Houston Chronicle, May 5, 1992.
  21. AppleTree creditors accept plan/Japanese bank would be biggest shareholder, Houston Chronicle, September 18, 1992.
  22. AppleTree revival plan gets boost/Japanese bank obtains approval to raise stake, Houston Chronicle, September 30, 1992.
  23. Grocery wars uproot AppleTree/Chain selling all its supermarkets, Houston Chronicle, November 16, 1993.
  24. Competitors carve up AppleTree/Nine rivals purchase 28 stores, Houston Chronicle, November 25, 1993.
  25. AppleTree closings surprise some/New owners preparing to reopen, Houston Chronicle, January 6, 1994.
  26. AppleTree store sold, Houston Chronicle, January 12, 1994.
  27. Hassel, Greg. "AppleTree to hand over most stores this week." Houston Chronicle. Tuesday January 4, 1994. Business 1. Retrieved on December 1, 2011.
  28. HEB buys Safeway warehouse/Chain expands in northwest area, Houston Chronicle, July 30, 1993.
  29. Six stores to keep AppleTree name/Sites seen as seeds for growth, Houston Chronicle, August 4, 1994.
  30. Last apple on the Houston tree/AppleTree cuts loose lone store, Houston Chronicle, July 23, 1997.
  31. Bryan Grocery Stores (PDF) Archived February 3, 2007, at the Wayback Machine, Bryan Texas Utilities, March 2004.
  32. http://blogs.houstonpress.com/eating/2009/12/top_5_grocery_store_closings_o.php
  33. http://www.theeagle.com/news/business/village-foods-opens-in-former-appletree/article_8486fac5-142a-5316-b8c3-60da325f3607.html
  34. http://www.kbtx.com/home/headlines/41124477.html
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