NORTHLAKE, Ill. -- Dominick's Finer Foods here plans to leverage its buying power as an affiliate of Yucaipa Cos., Robert A. Mariano, president and chief operating officer, told SN in an interview last week. Los Angeles-based Yucaipa completed its purchase of Dominick's for $749 million, including assumption of debt. Yucaipa also owns Smitty's Super Valu, Phoenix, and Food 4 Less Supermarkets, La Habra, Calif., which is negotiating to acquire Ralphs Grocery Co., Compton, Calif. Mariano said Dominick's and Food 4 Less are already working together on purchases.
"We will be leveraging the purchasing power of the Yucaipa affiliates to get the best prices by collaborating on purchases," Mariano told SN.
"We may do it by buying independently or buying as a single entity, but there will be no corporate overstructure to do it.
"We're still strategizing among ourselves about the best way to approach purchasing to get the most leverage. We're
working to develop ways to develop the best possible program." Dominick's operates 80 combination stores under the Dominick's banner, averaging 50,000 square feet, and 17 combination stores called Omni, averaging 90,000 square feet. During the last 18 months the company has upgraded perishables and added new eat-in areas at 12 of the core Dominick's stores and renamed them Fresh. At the time Yucaipa's proposed acquisition of Dominick's was disclosed, Yucaipa executives said the transaction would enable Dominick's to accelerate new-store development and modernization of existing stores. But, Mariano told SN last week, Dominick's capital budget will not change much in the next couple of years. Sums may increase after that.
He declined to pinpoint how much would be spent in any given year. He said the company plans to open two new Fresh units late this year and two more late in 1996. Dominick's also plans several remodels this year, though the number is still under discussion, he added. The chain will open its first ground-up Dominick's Fresh unit in the fall in Northfield, Ill., and another newly built Fresh unit is scheduled to open at about the same time in Banockburn, Ill., he told SN. Two more Fresh stores are slated to open late in 1996, Mariano said, although he declined to name the locations. All new Fresh units will be approximately 50,000 square feet, the same size as the existing Fresh stores, Mariano noted. He declined to say what changes might be included in the new Fresh stores. The company plans to open additional Omni stores as well as Fresh stores, he said.
He said Dominick's is looking at sites outside its current operating area, though he declined to say where. "We will explore all opportunities," he told SN. The chain has not ruled out growth through acquisition, "though we've got our plate full right now, and we need to work on what we've got first," he said. Dominick's, whose annual volume is approximately $2 billion, has a market share of 24% in the Chicago area -- second only to Jewel Food Stores' 36%. Dominick's intends to devote more energy on improving its own operation than on concentrating on closing the gap, he said.
