The purchase of Tops Friendly Markets by six top company officials is another sign that entrepreneurship is alive and well in Western New York.
It is a highly leveraged deal for one of the area’s largest private employers. But the renewed local focus for the Amherst-based supermarket chain could be good news for consumers in the form of lower prices and better selection.
The new owners, led by CEO Frank Curci, can be expected to better meet the demands of the local market. They will have to figure out how to deal with the huge debt involved in the deal. However, now that they can make decisions without seeking approval from out-of-town owners, they have a chance to maneuver the business in the right direction.
Curci has spent more than a third of his supermarket industry career with Tops and has nimbly adjusted to the rapid changes in the business.
He started with Tops in 1995 during the time the supermarket chain was run by Dutch grocery giant Royal Ahold, and rose through the ranks to become president and chief executive officer. He resigned in 2003 amid a probe of accounting irregularities and worked at a couple of other food chains before finding his way back to Tops.
His opportunity came when Ahold decided to sell off some of the businesses it considered underperforming. Curci approached Morgan Stanley Global Private Equity about backing a deal to buy the chain, and the acquisition was completed by 2007. With that done, he was back at the helm and could complete what had to be a mission to correct Ahold’s mistakes and return to Buffalo the old Tops with its hometown flavor.
Under Curci, Tops greatly increased the number of stores from 71 to its current 159 through acquisitions and expanded Tops’ presence in northeastern New York, northern Pennsylvania and western Vermont.
In addition, earlier this year Tops opened an upscale health food and gourmet store called Orchard Fresh in Orchard Park and it is scouting out locations for another one.
Abandoning Ahold’s rigid corporate structure did more than just improve reach and store counts. Tops began to feel different, more like what consumers remembered from the pre-Ahold days. But Tops was never going to be a long-term investment for Morgan Stanley, and Curci and five other Tops executives came up with a buyout plan financed by Bank of America.
The other new owners are Kevin Darrington, Tops chief operating officer; Rick Mills, chief financial officer; John Persons, senior vice president of operations; Jack Barrett, senior vice president for human resources; and Lynne Burgess, senior vice president and general counsel.
The grocery business is highly competitive in Western New York. Tops faces traditional competitors such as Wegmans and Dash’s, and they are all under siege from discounters such as Aldi, Save-A-Lot and especially Walmart. And now Trader Joe’s, a high-end market based in California, has opened in Amherst.
As a result, profit margins for food markets are painfully thin.
The new owners clearly have a difficult road ahead, but one thing is certain: local ownership by committed executives with a local focus offers the best chance of success.