Safeway in agreement to purchase remaining Andronico's

OAKLAND, Calif. (KTVU) - It's a Bay Area brand that's been around for nearly 90 years, the independent grocery chain Andronico's has suddenly announced new ownership. Safeway is buying its five remaining stores.

Two of them are in Berkeley including its flagship store. The other stores are in San Francisco, San Anselmo and Los Altos. An Andronico's spokeswoman said the chain was actually doing well, making a profit after filing for bankruptcy five years ago.

It's a high-end grocery chain known for its specialty foods and Bay Area roots. Andronico's first store was founded in Berkeley in 1929. After 87 years, on its web site, Andronico's announced Safeway is buying its last remaining stores. Customers at the Los Altos location found the news hard to digest.

"I think it's a shame," said Brad Beedle of Los Altos. "They have been there for years. It is my neighborhood store."

"There's a Safeway a half mile down the road," said Jocelyn Steffen of Los Altos. "Do we need another Safeway? There's Lucky's right up that way. It's just a nice family market and it's always bummer to see those go away,"

According to a company spokeswoman, Adronicio's owner Renova Capital approached Safeway. The private equity firm acquired the chain out of bankruptcy in 20111 in debt following failed attempts to expand. After turning the company around, the firm thought Safeway was the right company to purchase them.

"It's just sort of a sign of the times that the big Walmart big box stores come in and kick what we are used to," said Steffen.

The Andronico's stores will be rebranded as Safeway Community Markets. It's a new concept from Safeway promising to offer the same local products.

"Grocery is the notoriously tough retail business," said Kirthi Kalyanam, director of Santa Clara University's Retail Management Institutde. "Very low margin, hyper competitive. Scale really matters."

He's not surprised by the acquisition. He said more customers are turning to e-commerce for gourmet foods and grocery delivery services like Amazon Fresh making it harder for traditional grocery chains to compete.

"The Bay Area consumer is fairly sophisticated, fairly tech savvy, fairly affluent and fairly knowledgeable about food," said Kalyanam. "They are probably buying more specialty food online than any other geographic area."

Andronico's said all 400 union store employees will be offered positions with Safeway. The transition is expected to happen in mid-December.

Renovo claims part of the goal is preserving union jobs and that affected workers would receive their same pay rates and benefits.

"Andronico's Community Markets have developed a well-respected brand and loyal customer base, and we are committed to keeping the local heritage alive. Our goal is to preserve everything great about Andronico's while adding Safeway's innovations and great Own Brands products including O Organics", said Tom Schwilke, President of Safeway Northern California.

Andronico’s workers will continue in their same assignments as part of the agreement for what the company called a smooth transition.

"We're proud that Safeway has chosen our stores and our TeamMates to join their dynamic company.  We're synergistic retailers who share a commitment to best quality, local and artisanal foods, as well as in supporting union jobs within our communities", said Suzy Monford, CEO of Andronico's Community Markets.