Giving away ice cream is hard.
At least it is for some grocery store managers.
That's what Max Raydon found out when his company, Homeland
Stores Inc., embarked upon an advertising program guaranteeing
customer service. The program says that if three people are in line
waiting to check out and pay for their groceries, another cash
register will be opened until all cash register and check out stands
If the store manager fails to do this, the person in line gets a
free half-gallon of ice cream.
"It's not going well," Raydon, president and chief executive
officer of Homeland, said. "It's not the cost of the ice cream, for
we make it ourselves, it's just that it's hard for some managers to
give away anything."
But this minor glitch is one of the few problems that Homeland
has incurred since it became a private company as a leveraged buyout
of the 106-store Oklahoma Division of Safeway Stores Inc.
Since the buyout in November 1987, the company has spent $40
million in a remodeling and upgrade program.
This has included:
- Remodeling 59 stores.
- Relocating several old stores into new buildings.
- Start of construction on four stores which are expected to
be opened this year.
- Six more sites have been chosen for new stores.
- Three independent stores have been purchased and renamed
- One store has closed.
- Adding 1,300 employees to the payroll.
- Promoting 860 employees into management positions.
All this activity has been accomplished through cash flow funds,
"And, I'm happy to report that we're two and a half years ahead
of our loan repayment schedule," he said.
Since the leveraged buyout, organized by private investors and
the New York investment firm of Clayton Dubilier along with Safeway's
Oklahoma Division managers, the company has become a strong Oklahoma
company, Raydon said.
"In fact we're looking toward the day when we'll either take
this company public (make a public stock offering) or take other
steps to make this an even more Oklahoma company," he said. "One day
that will happen.
"Until then, we will continue to grow this company to increase
our market presence within a 600-mile range through adding new
stores and acquisitions."
The company has increased its share of the markets it serves by
the rate of 2 percent per year since January 1988, Raydon said.
Success of Homeland is attributable to the "entrepreneurial
attitude of employees," he said.
"When we took people out of the corporate environment and into
the private company environment, it made a big change in the
decision-making process," he said. "Our employees are owners of this
company. So when they make a decision or a recommendation, they
know they must also find out how to pay for it.
"Instead of the corporate attitude of making a recommendation
with a full report, then letting someone else worry about costs and
repayment, the employees know who's paying.
"It used to be that the buyers were looking for the best prices
they could get because they didn't want that guy in Seattle to
"Now, those buyers are not only trying to get the best prices,
but they also consider if the price is low enough so that it can be
sold and attract the volume necessary to generate income to pay
their bills. That's a big change."
But the road to taking a public company private has not been all
easy for Homeland management. …