Gelson’s CEO has high hopes for San Diego
The Southern California supermarket wars advanced as a bankruptcy court OK’d the sale of several Haggen stores, allowing high-end grocer Gelson’s into San Diego County for the first time.
Gelson’s sought eight stores, and was approved by the court for six locations, two of them in San Diego County, on Friday. The two other locations are still in dispute. Gelson’s paid $36 million.
Gelson’s CEO Rob McDougall said Monday that the company has been trying for years to get into San Diego and thinks it will succeed by cornering a niche market. He also has growth aspirations.
“I think we bring an offering down there that isn’t in San Diego, at least not to the level we do,” he said. “We’re more high-end. We really want to attract that foodie customer that is looking for the best quality.”
McDougall said its stores in Orange County and the Los Angeles area are a favorite of celebrities and chefs.
The 64-year-old company often gets letters from former shoppers who relocated to San Diego stating they want a Gelson’s in their neighborhood, McDougall said. The company’s office has been inundated with calls and emails from excited shoppers since Gelson’s made the offer on the Haggen stores, he said.
“I think our reputation precedes us,” he said.
Gelson’s plans to hire back former Haggen employees, although they will be re-interviewed, and add other workers. A Dec. 5 job fair is being planned at its new Del Mar location, and information will be posted on its website. It aims to open in early 2016.
Smart & Final, which is also vying for Haggen stores, has paid $56 million for 28 stores in Southern California, Haggen said.
Smart & Final said it plans to open in mid-2016 and “will interview any and all qualified applicants in advance of our new store openings.”
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San Diego attorney Christine Baur phoned into the bankruptcy court hearing Friday and said Haggen said it had received $47 million for 55 stores not included in the Gelson’s and Smart & Final buys.
Baur, who represented the landlords of the Broadway Street store in El Cajon, noted the auction netted $15 million more than initial bids. She did not expect a lot of resistance to the other bids, which include offers from Tawa, Albertsons, Bristol Farms and several investment firms.
“It all got pushed through quickly, and it’s almost a guarantee the same thing will happen next week,” she said.
Offers for Haggen stores approved by bankruptcy judge:
Gelson’s
Del Mar: Via De La Valle
La Jolla: Turquoise St.
Smart & Final
Carlsbad: Carlsbad Village Drive
Coronado: B Ave.
El Cajon: Fletcher Parkway
La Mesa: Avocado Ave.
San Diego: Tierra Santa Blvd.
San Diego: Westview Parkway
Santee: Magnolia Ave.
San Ysidro: W. San Ysidro Blvd.
Two stores Gelson’s has put bids on, in Laguna Beach and Carlsbad, are still being decided because of disputes between landlords and Haggen.
“We see future growth. I don’t see 10 more stores in San Diego,” McDougall said. “But, I think it is safe to say if we get these three, there’s at least another two to four that, if I could pick the location, we would plug it in right now.”
In terms of building ownership, Albertsons owns the most real estate for grocery space in the county with 693,451 square feet in rentable space over 14 stores, according to CoStar.
The only other grocery store company to actually own property, Kroger, the parent of Ralphs, has 150,169 square feet of rentable space over three buildings, CoStar data shows.
McDougall said part of what sets it apart from Whole Foods, which has four stores in San Diego County, is an effort not to tell people what they should eat.
“Whole Foods won’t sell Diet Coke,” he said. “I have customers that like Diet Coke. I’m not embarrassed to say it.”
Bids on 12 other San Diego County stores will be decided by a judge next week as Haggen’s bankruptcy works its way through the courts.
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