Worker Walkout Results In New Test For Market Basket

Employees Cristhian Romero and Tracie Parker embrace near a poster of Arthur T. Demoulas at a store in Chelsea. (Steven Senne/AP)

Employees of the Chelsea Market Basket embrace near a poster of Arthur T. Demoulas Thursday. (Steven Senne/AP)

BOSTON — For the first time since he was fired as CEO in June, Arthur T. Demoulas parked at Market Basket’s headquarters in Tewksbury Thursday morning and began his workday.

Hundreds of workers greeted him, back on the job too just hours after the deal was signed for Demoulas to buy out his rival cousin in the family-owned business.

Demoulas climbed onto the back of pickup truck and told workers he loved them. “You, you and only you, have taught the professors and the CEOs that the workplace here at Market Basket is so much more than just a job,” he said to cheers.

Many of the company’s 25,000 employees can hardly believe it. They brought the $4 billion chain to a standstill — and made history — by winning back their CEO.

“There’s no words for it,” said Bill Nascimento, laughing. He’s a bakery manager at the Fitchburg store. “I’m just happy. This is what we were dreaming every single day.”

At a Market Basket warehouse, the forklifts were rolling again.

“These guys are loading the trucks going to the stores. These are all loaded up, full trailers. Gonna get this work out of here,” said warehouse manager Brian Kelleher, who knows that the sooner stores have food on their shelves, the sooner Market Basket can make money again.

“You got dog food, you got tuna fish, you got pickles. I mean, you’ve got everything that these people need right now to get their groceries in their cupboards,” Kelleher said. “Try to get those customers back on board with us, which I’m sure they will be.”

But that’s an open question. The walkout forced customers to do their grocery shopping elsewhere, and they may not all come back. It could also take weeks to restore relationships with food suppliers.

Frank Hoy, who researches family businesses at Worcester Polytechnic Institute, says after losing millions of dollars, Market Basket is now in a very different financial position.

“Whatever happens, you know, there’s gonna be debt to be serviced that this company hasn’t dealt with before,” Hoy said. “And that almost certainly means belt-tightening.”

That’s because as part of the deal, returning CEO Arthur T. Demoulas is replacing his rival family members with new investors. He’s reportedly getting money from a private equity firm and a commercial bank. The company culture may be stronger than ever in this astounding victory, but the worker walkout has resulted in new test for Market Basket.

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  • Rod Butler

    I see many enthusiastic customers today who were warmly greeted at the door by workers and managers. Customers and workers feel this was a partnership of support and will return in droves to shop there. They will succeed big time and become a beacon for other businesses to emulate and gain lifetime customers instead of milking profits for the top few to walk away at the expense of the customers and workers to line their own pockets.

  • Avery

    This was devastating for Market Basket as a corporation, but employees and customers fought it out together and they will come back together.

    • Smitty

      Devastating? For the last six weeks, yes. But now? With the stories circulating nationwide, (with all the free publicity this is generating) don’t be surprised if the Market Basket chain is both out of debt AND showing record profits in a very short time!

      • Demokirby

        I am pretty sure some where in the upper 90% of customers will be coming back. Very few were probably lost to their rivals. But I expect the publicity has likely brought in a whole new crowd of shoppers who have built a very positive image for MB over this period of time. Expect to see more upper middle yuppies doing some shopping in MB than ever.

      • Vandermeer

        My friends who never went to Market Basket are shopping there now. This was great publicity.

  • Argle_Bargle

    This pseudo-editorial should read ‘Sure, it was an unprecedented show of solidarity by both employees and customers, and against stiff odds versus corporate ghouls they self-organized and prevailed. But let me try and sow fear, uncertainty, and doubt anyway.’

    But this latest NPR offering is an unwitting reveal of business propaganda hostile to both laborers and the community. Any schlub with awareness of branding would have to acknowledge that this win is priceless publicity; how could that not come to mind? Most businesses wonder how to bring people in, but Market Basket won’t be able to keep them away. And the closing paragraph is nonsense, passive aggression punctuated by speculation – note the attempt to scatter the various parties now basking in hard-won harmony. The reporter is little more than a business-class commissar.

    The crisis now faced by Market Basket is roughly equivalent to that faced by the Patriots after they first won the Super Bowl – victorious but still very busy. Market Basket and its employees and its customers will be stronger than ever.

  • PaulD

    The money lost over the 6 weeks can be recovered from fairly easily given that payroll expenses and CoGS were also lower over that period than if business operations were normal. The good publicity will also, probably, mean a spike in sales over the subsequent weeks.

    The bigger question is how will MB operate now that it has a debt burden and these outside investors. Presumably the outside investors want to work with ATD because of how he runs the business. The debt burden though, in a low margin business, won’t be easy to deal with.

    • Smitty

      Don’t count the management and the employees out yet! Yes, the chain now has a debt burden, but given what went on in the past few weeks with it, investors would be crazy to challenge DeMoulas as he guides this company to the future. As another story reported, Arthur T. stands in awe of his employees–and the employees return that respect. If the company has some hard times coming, although that doesn’t seem like it will, the employees would probably buck up and support it like they did this time.

      As a Los Angeles Times editorial put it, this is a lesson to be shown to the entire corporate retail world. A formula of decent pay and profit sharing to the workers (in other words taking care of the workers) while still offering low prices and quality service–AND the company still showing profits even though they can do that–shows that the claims of retail giants like Wal-Mart are lying through their teeth when they say they can’t afford to do what Market Basket is doing–successfully.

      • Smitty

        Here is a partial copy of that editorial:

        “Market Basket under Arthur T. was everything the Occupy movement said American business could be. Its executives are rich, its workers fairly compensated, and its customers satisfied. The company is living proof that low worker pay is not a matter of economic necessity, it’s a choice rooted in greed. If a regional grocery store chain can pay workers fairly, offer discount prices, and still make billions, that means the retail monoliths of the world such as Wal-Mart should have no problem doing the same. Companies such as Wal-Mart choose not to pay their workers fairly, and claim false poverty when pressured to improve their workers’ lots.

        The Market Basket saga is far more important than the fate of one ousted CEO. It’s about the future of American capitalism. So long as Market Basket exists in its current state, any argument against guaranteeing a living wage to American workers rings demonstrably false. The company was a beacon for how American business can and should be run. We should all be voicing our support to keep it that way.”
        –from the LA Times, 8/28/14

      • PaulD

        I didn’t count them out. Nor did I say that the debt burden will make it impossible for them to succeed. In fact I think it’s likely they will succeed. However, I don’t think things will be exactly the same for MB either. As a guess, I’d be surprised if profit sharing payouts will be quite as generous. After all, profits will likely be lower as MB will now have interest payments. I also wonder if they’ll be able to expand at the rate they were, which was previously self funded.

        I tend to think MB will continue in mostly the same way they were but I’d also expect the debt and outside investors to have at least some negative impact on prices, employee compensation, expansion or some combination there of. I hope that’s not the case but it seems logical that there has to be an effect.

        As for the LA Times editorial, meh. I’m glad things turned out as well as they did for MB and if I ran a big company like that, I’d like to think I’d treat the employees as fairly as ATD tries to. However, I never saw any evidence that the Occupy movement thought rich company owners should be part of the equation and it’s far too early to say that this event is an indication of any greater change.

        • Smitty

          Because of debt service costs the profits of the chain may be lower, (don’t bet the farm on that, though) but if you meant that the profit sharing percentage will be cut, (I’m not saying that you did) according to the words of Arthur T., you’re wrong.

          He has already said that worker’s compensation will not be affected at all. This man has his finger on his company and he knows how to make it successful. He’s been there and done that, and if the investors and the minority stockholders try to band together to change things they’re likely to see a repeat of exactly what happened just this past June when A. T. was fired.

          The publicity that resulted from this incident will draw people who never shopped Market Basket to the stores to see for themselves why this chain has the reputation it has, and a lot of them will keep coming back. I think that the numbers of those people will surpass by far the people that would have stopped shopping there. Like Artie T. has said, they’re back and they’ll be better than ever.

          • PaulD

            Logically, servicing a debt has to impact the profit margin, but maybe they can overcome that by increased volume due to the publicity. Also, the store managers (I know one) have stated they’re willing to forego the profit sharing to get the company back on track. I hadn’t heard that ATD made that promise and I agree that he’s proven to be competent, so good on him.

            Don’t take my statements the wrong way. I support what the employees did and as a customer, I’m very glad that ATD is back. The after effects of this will be overcome, but they’re still a burden.

          • Smitty

            I suspected that after re-reading your last post that we’re both arguing the same side, now I know we are. I too support the store, it’s employees and Arthur T. and feel that whatever is in the future, it will be nothing but success for the chain.

        • Smitty

          The occupy movement is the opposite of the executive/company profiteering situation that exists in too many companies these days. I’d say that Market Basket is more middle of the road–between the two extremes.

  • bostonbum1

    ATD has one “big nut” to take care of. Investor and commercial bank loans are expensive to service plus MB Has several new stores built but haven’t been opened and have a huge construction loan payments to make. Prices will have to rise and the work force will have to be scrutinized or else MB will fail financially.

    • Smitty

      Don’t bet on it.

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