Penn Traffic
Encyclopedia
The Penn Traffic Company was the parent company
for 79 (as of January 25, 2010) retail
grocery supermarket
s in the Northeastern United States
, concentrating mostly in Central New York
. Its headquarters were in Syracuse, New York
. Penn Traffic formerly had supermarkets also in Pennsylvania, Vermont and New Hampshire under the Insalaco's, Bi-Lo/Riverside, P&C and Quality
trade names. Penn Traffic operated a wholesale food distribution business (purchased in 2008 by C&S Wholesale Grocers
) serving approximately 121 independent operators. On January 25, 2010 the corporation's assets were sold to Tops Markets in US Bankruptcy Court, for approximately $155 million.
, Pennsylvania
. Over the years, Penn Traffic evolved into a large retail
and wholesale
supermarket company. Riverside, founded in Brookville, Pennsylvania
in 1928, became part of the Penn Traffic family in 1962, and began developing the Bi-Lo format in the 1980s (not related to the chain
in the Mid-Atlantic). Penn Traffic operated 43 supermarkets under the Bi-Lo trade name across Pennsylvania, and also distributed food to 51 franchise and independent supermarkets from its DuBois, Pennsylvania
distribution facility. Quality Markets http://www.qualitymarkets.com, founded in Jamestown
, New York
in 1913, joined the Penn Traffic family in 1979. Penn Traffic operated a total of 34 supermarkets under the Quality trade name in southwestern New York and northwestern Pennsylvania.
as a way for farmers in Upstate New York
to get their products to market efficiently. Until 2010, Penn Traffic operated 70 P&C supermarkets serving the Syracuse metropolitan area as well as many other communities in upstate New York, Vermont
, New Hampshire
and Pennsylvania. P&C was also a major wholesaler in upstate New York; from its Syracuse warehouse, the company served 99 independent supermarkets in central New York, the majority of which still operate under the Big M franchise trade name. In 1997 a new ballpark for the Syracuse Chiefs opened. Penn Traffic owned the naming rights for nine baseball seasons of P & C Stadium
.
mainframe computer
. Big Bear has also been a pioneer in establishing supermarket service departments, developing a strong reputation for its high quality produce
, meat
, deli
and bakery
departments. Its Big Bear Plus stores were among the first superstores combining a supermarket with a general merchandise store. Penn Traffic operated 70 Big Bear and Big Bear Plus stores in Ohio and West Virginia until early 2004. As a result of Penn Traffic's 2003 bankruptcy
filing, these stores were either closed or sold to other companies, such as grocery retailer Giant Eagle
, while other properties were left vacant and still remain vacant. The Columbus, Ohio warehouses operated by Big Bear were also left vacant and subsequently torn down for redevelopment.
supermarket chain in California. Hawkins, forced to cut costs, fired 325 employees, including all five division heads, some with 20 years or more with Penn Traffic.
As CEO, Hawkins replaced USDA Choice meat in its butcher shops with a cheaper grade meat. In an effort to reposition its stores as focused on "value", rather than time-tested formulas within specific markets that had worked for the chains, Hawkins slashed expenses by using generic grocery bags, postponing store maintenance and reducing benefits to employees as well. In the Columbus market, prices did not uniformly drop and competitors like Kroger and Meijer regularly beat Big Bear in third-party cost comparisons. Customers noticed the changes, and unhappy with what they saw and were experiencing, stopped shopping.
Meanwhile, better-capitalized competitors like Wegmans Food Markets and Kroger
cut into market share. Same-store sales fell 8.2% in fiscal 1998, while operating income declined another 6%, to $165 million. In Columbus, where Kroger and Big Bear had once been neck and neck, Big Bear's market share dropped to 20% from 25%, while Kroger's rose to 54% from 44% in 1998, according to a survey by the Columbus Dispatch. Hawkins resigned before the first bankruptcy filing, March 1, 1999.http://www.forbes.com/forbes/1999/0405/6307120a.html
Penn Traffic completed its financial restructuring in June 1999 with more than 75% of its debt retired. In 2003 the company filed for bankruptcy again, this time resulting in the loss of Big Bear, one of their largest and most important grocery chains. The move came as a surprise to many, since most people perceived Big Bear as Penn Traffic's "crown jewel" and the chain was more profitable compared to its P&C Stores family members.
In 2007, two former Penn Traffic executives were indicted on fraud charges.
In early 2008, Penn Traffic closed its private bakery, Penny Curtiss. The bakery provided bread products for its own stores as well as to other supermarket chains. Penn Traffic cited the loss of the local Aldi
stores contract in August 2007 as the primary reason for the bakery's closing. The company also said the bakery was contributing less than 4 percent of Penn Traffic's total annual revenue. http://www.penntraffic.com/Financials/NewsReleasePDF/080102NewsRelease.pdf
In December 2008 The Penn Traffic Company entered into a definitive agreement to sell its wholesale business segment to C&S Wholesale Grocers Inc.
On November 18, 2009, Penn Traffic filed for Chapter 11 Bankruptcy protection after second-quarter losses of $7 million (the highest loss ever for the company), missed loan payments, and slower shipments from suppliers. Originally, the company intended to sell all of its assets by the end of 2009 and close on the deal or deals by the early January 2010.
As of January 9, 2010 Penn Traffic is entertaining 3 separate bids: $54 million from Price Chopper
for 22 P&C Foods stores, a private bid of $36.5 million from a team of professional liquidators for all of P&C's assets and $85 million from Tops Markets for all of Penn Traffic's stores http://www.syracuse.com/news/index.ssf/2010/01/a_recap_and_more_news_penn_tra.html
The BiLo name survives in Pennsylvania as those stores are franchises, though three former locations have since converted to Tops.
The P&C name will be relaunched by three ex-PT executives in Cortland, Ithaca, and Sayre.
Parent company
A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company...
for 79 (as of January 25, 2010) retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
grocery supermarket
Supermarket
A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
s in the Northeastern United States
Northeastern United States
The Northeastern United States is a region of the United States as defined by the United States Census Bureau.-Composition:The region comprises nine states: the New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont; and the Mid-Atlantic states of New...
, concentrating mostly in Central New York
Central New York
Central New York is a term used to broadly describe the central region of New York State, roughly including the following counties and cities:...
. Its headquarters were in Syracuse, New York
Syracuse, New York
Syracuse is a city in and the county seat of Onondaga County, New York, United States, the largest U.S. city with the name "Syracuse", and the fifth most populous city in the state. At the 2010 census, the city population was 145,170, and its metropolitan area had a population of 742,603...
. Penn Traffic formerly had supermarkets also in Pennsylvania, Vermont and New Hampshire under the Insalaco's, Bi-Lo/Riverside, P&C and Quality
Quality Markets
Quality Markets was an American supermarket chain, with stores in Western New York and northwestern Pennsylvania. It was a subsidiary of Penn Traffic, but is now a division of Tops Markets LLC.- History :...
trade names. Penn Traffic operated a wholesale food distribution business (purchased in 2008 by C&S Wholesale Grocers
C&S Wholesale Grocers
C&S Wholesale Grocers is a wholesale distributor of food and grocery store items. With its headquarters in Keene, New Hampshire, C&S is the twelfth-largest privately held company in the United States, as listed in 2008 by Forbes. , they are the eighth-largest such company...
) serving approximately 121 independent operators. On January 25, 2010 the corporation's assets were sold to Tops Markets in US Bankruptcy Court, for approximately $155 million.
Origins
Penn Traffic traces its origins back to the 1850s, when it was a trading post in JohnstownJohnstown, Pennsylvania
Johnstown is a city in Cambria County, Pennsylvania, United States, west-southwest of Altoona, Pennsylvania and east of Pittsburgh. The population was 20,978 at the 2010 census. It is the principal city of the Johnstown, Pennsylvania, Metropolitan Statistical Area, which includes Cambria County...
, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
. Over the years, Penn Traffic evolved into a large retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
and wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
supermarket company. Riverside, founded in Brookville, Pennsylvania
Brookville, Pennsylvania
Brookville is a borough in Jefferson County in the U.S. state of Pennsylvania, 100 miles northeast of Pittsburgh. 2,472 people lived in Brookville in 1900, and 3,003 people lived there in 1910. The population was 4,230 at the 2000 census...
in 1928, became part of the Penn Traffic family in 1962, and began developing the Bi-Lo format in the 1980s (not related to the chain
BI-LO (United States)
BI-LO is a supermarket chain headquartered in Mauldin, South Carolina. As of May 2010, BI-LO operates 207 supermarkets in South Carolina, North Carolina, Georgia, and Tennessee. The company employs approximately 17,000 people. Supermarket News ranked BI-LO No...
in the Mid-Atlantic). Penn Traffic operated 43 supermarkets under the Bi-Lo trade name across Pennsylvania, and also distributed food to 51 franchise and independent supermarkets from its DuBois, Pennsylvania
DuBois, Pennsylvania
DuBois is a city in Clearfield County, Pennsylvania, northeast of Pittsburgh. It is the principal city in the DuBois, Pa Micropolitan Statistical Area.-History:...
distribution facility. Quality Markets http://www.qualitymarkets.com, founded in Jamestown
Jamestown, New York
Jamestown is a city in Chautauqua County, New York in the United States. The population was 31,146 at the 2010 census.The City of Jamestown is adjacent to Town of Ellicott and is at the southern tip of Chautauqua Lake...
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
in 1913, joined the Penn Traffic family in 1979. Penn Traffic operated a total of 34 supermarkets under the Quality trade name in southwestern New York and northwestern Pennsylvania.
Acquisition
In 1988, Penn Traffic, under then-chairman Gary Hirsch, began an acquisition program. Hirsch, an accountant by training, spent eight years at Price Waterhouse before leaving in 1981. He reformed Penn Traffic by combining three strong regional food distributors. In 1987 Hirsch took the company private for $131 million through his investment firm, Miller Tabak Hirsch & Co. In 1988 Hirsch took Penn Traffic public, raising $25 million, and then added Syracuse- based P&C Food Markets for $219 million. In 1989 Penn Traffic acquired Ohio chain Big Bear Stores for $341 million. http://www.forbes.com/forbes/1999/0405/6307120a.htmlP&C Foods
P&C Foods began in 1944 as the Producers and Consumers food cooperative in Ithaca, New YorkIthaca, New York
The city of Ithaca, is a city in upstate New York and the county seat of Tompkins County, as well as the largest community in the Ithaca-Tompkins County metropolitan area...
as a way for farmers in Upstate New York
Upstate New York
Upstate New York is the region of the U.S. state of New York that is located north of the core of the New York metropolitan area.-Definition:There is no clear or official boundary between Upstate New York and Downstate New York...
to get their products to market efficiently. Until 2010, Penn Traffic operated 70 P&C supermarkets serving the Syracuse metropolitan area as well as many other communities in upstate New York, Vermont
Vermont
Vermont is a state in the New England region of the northeastern United States of America. The state ranks 43rd in land area, , and 45th in total area. Its population according to the 2010 census, 630,337, is the second smallest in the country, larger only than Wyoming. It is the only New England...
, New Hampshire
New Hampshire
New Hampshire is a state in the New England region of the northeastern United States of America. The state was named after the southern English county of Hampshire. It is bordered by Massachusetts to the south, Vermont to the west, Maine and the Atlantic Ocean to the east, and the Canadian...
and Pennsylvania. P&C was also a major wholesaler in upstate New York; from its Syracuse warehouse, the company served 99 independent supermarkets in central New York, the majority of which still operate under the Big M franchise trade name. In 1997 a new ballpark for the Syracuse Chiefs opened. Penn Traffic owned the naming rights for nine baseball seasons of P & C Stadium
Alliance Bank Stadium
Alliance Bank Stadium is an 11,071-seat minor league baseball stadium in Syracuse, New York. The stadium opened on April 10, 1997, replacing the aging MacArthur Stadium which had been home to Syracuse's professional baseball team since 1934...
.
Big Bear
When the first Big Bear opened in 1934, it marked the beginning of self-service supermarketing in the Midwest. Big Bear was the first supermarket in the country to use cashier-operated motorized conveyor belts and the first to use an IBMIBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
mainframe computer
Mainframe computer
Mainframes are powerful computers used primarily by corporate and governmental organizations for critical applications, bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.The term originally referred to the...
. Big Bear has also been a pioneer in establishing supermarket service departments, developing a strong reputation for its high quality produce
Produce
Produce is a generalized term for a group of farm-produced goods and, not limited to fruits and vegetables . More specifically, the term "produce" often implies that the products are fresh and generally in the same state as where they were harvested. In supermarkets the term is also used to refer...
, meat
Meat
Meat is animal flesh that is used as food. Most often, this means the skeletal muscle and associated fat and other tissues, but it may also describe other edible tissues such as organs and offal...
, deli
Delicatessen
Delicatessen is a term meaning "delicacies" or "fine foods". The word entered English via German,with the old German spelling , plural of Delikatesse "delicacy", ultimately from Latin delicatus....
and bakery
Bakery
A bakery is an establishment which produces and sells flour-based food baked in an oven such as bread, cakes, pastries and pies. Some retail bakeries are also cafés, serving coffee and tea to customers who wish to consume the baked goods on the premises.-See also:*Baker*Cake...
departments. Its Big Bear Plus stores were among the first superstores combining a supermarket with a general merchandise store. Penn Traffic operated 70 Big Bear and Big Bear Plus stores in Ohio and West Virginia until early 2004. As a result of Penn Traffic's 2003 bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
filing, these stores were either closed or sold to other companies, such as grocery retailer Giant Eagle
Giant Eagle
Giant Eagle, Inc., is a supermarket chain with stores in the U.S. states of Pennsylvania, Ohio, West Virginia, and Maryland. The company was founded in 1918 in Pittsburgh, Pennsylvania. Supermarket News ranked Giant Eagle No. 21 in the 2009 "Top 75 North American Food Retailers" based on 2008...
, while other properties were left vacant and still remain vacant. The Columbus, Ohio warehouses operated by Big Bear were also left vacant and subsequently torn down for redevelopment.
Keeping Up
In the early and middle 1990s Penn Traffic continued to grow as it acquired and built other supermarkets in and near its primary markets. During this time, Penn Traffic entered the Buffalo and Erie markets with the Quality trade name and made substantial investments to enhance its store base and distribution network, while maintaining steady growth in cash flow and profitability.Phil Hawkins and PR problems
In 1997, Hirsch hired Phil Hawkins, who was credited with saving the VonsVons
Vons is a southern California and southern Nevada supermarket chain and a division of Safeway Inc. It is headquartered in Arcadia, California, and operates stores under the Vons and Pavilions banners.-Beginning:...
supermarket chain in California. Hawkins, forced to cut costs, fired 325 employees, including all five division heads, some with 20 years or more with Penn Traffic.
As CEO, Hawkins replaced USDA Choice meat in its butcher shops with a cheaper grade meat. In an effort to reposition its stores as focused on "value", rather than time-tested formulas within specific markets that had worked for the chains, Hawkins slashed expenses by using generic grocery bags, postponing store maintenance and reducing benefits to employees as well. In the Columbus market, prices did not uniformly drop and competitors like Kroger and Meijer regularly beat Big Bear in third-party cost comparisons. Customers noticed the changes, and unhappy with what they saw and were experiencing, stopped shopping.
Meanwhile, better-capitalized competitors like Wegmans Food Markets and Kroger
Kroger
The Kroger Co. is an American supermarket chain founded by Bernard Kroger in 1883 in Cincinnati, Ohio. It reported US$ 76.7 billion in sales during fiscal year 2009. It is the country's largest grocery store chain and its second-largest grocery retailer by volume and second-place general retailer...
cut into market share. Same-store sales fell 8.2% in fiscal 1998, while operating income declined another 6%, to $165 million. In Columbus, where Kroger and Big Bear had once been neck and neck, Big Bear's market share dropped to 20% from 25%, while Kroger's rose to 54% from 44% in 1998, according to a survey by the Columbus Dispatch. Hawkins resigned before the first bankruptcy filing, March 1, 1999.http://www.forbes.com/forbes/1999/0405/6307120a.html
Financial Troubles & Bankruptcy court
In the late 1990s, Penn Traffic experienced a significant reduction in its profitability because of several merchandising and operational changes that had a negative impact on its business. By late 1998, the company realized that while it had strong consumer franchises, it was working under an untenable debt burden. To address this challenge, in early 1999 Penn Traffic negotiated an agreement with bondholders to restructure more than $1.1 billion in bond debt.Penn Traffic completed its financial restructuring in June 1999 with more than 75% of its debt retired. In 2003 the company filed for bankruptcy again, this time resulting in the loss of Big Bear, one of their largest and most important grocery chains. The move came as a surprise to many, since most people perceived Big Bear as Penn Traffic's "crown jewel" and the chain was more profitable compared to its P&C Stores family members.
In 2007, two former Penn Traffic executives were indicted on fraud charges.
In early 2008, Penn Traffic closed its private bakery, Penny Curtiss. The bakery provided bread products for its own stores as well as to other supermarket chains. Penn Traffic cited the loss of the local Aldi
ALDI
ALDI Einkauf GmbH & Co. oHG, doing business as ', short for "Albrecht Discount", is a discount supermarket chain based in Germany...
stores contract in August 2007 as the primary reason for the bakery's closing. The company also said the bakery was contributing less than 4 percent of Penn Traffic's total annual revenue. http://www.penntraffic.com/Financials/NewsReleasePDF/080102NewsRelease.pdf
In December 2008 The Penn Traffic Company entered into a definitive agreement to sell its wholesale business segment to C&S Wholesale Grocers Inc.
On November 18, 2009, Penn Traffic filed for Chapter 11 Bankruptcy protection after second-quarter losses of $7 million (the highest loss ever for the company), missed loan payments, and slower shipments from suppliers. Originally, the company intended to sell all of its assets by the end of 2009 and close on the deal or deals by the early January 2010.
As of January 9, 2010 Penn Traffic is entertaining 3 separate bids: $54 million from Price Chopper
Price Chopper
Price Chopper Supermarkets is a chain of supermarkets headquartered in Schenectady, New York. The chain began operating as Central Markets in Schenectady, New York in 1933 and changed its name to Price Chopper in 1973. It is presently owned by the Golub Corporation and run by Neil and Jerel Golub...
for 22 P&C Foods stores, a private bid of $36.5 million from a team of professional liquidators for all of P&C's assets and $85 million from Tops Markets for all of Penn Traffic's stores http://www.syracuse.com/news/index.ssf/2010/01/a_recap_and_more_news_penn_tra.html
Sale to Tops Markets
On January 25, 2010, Tops Markets' bid was signed off by a Federal Judge in US Bankruptcy Court and was awarded the sale of all 79 Penn Traffic stores. Closing occurred on Jan 29, 2010. The amount of the sale will end up being slightly more than the previously agreed upon price of $85 million cash and assumption of approximately $70 million of Penn Traffic's debt. http://www.syracuse.com/news/index.ssf/2010/01/judge_approves_sale_of_penn_tr.htmlThe BiLo name survives in Pennsylvania as those stores are franchises, though three former locations have since converted to Tops.
The P&C name will be relaunched by three ex-PT executives in Cortland, Ithaca, and Sayre.