Now a regional grocery chain and subsidiary of Belgium-based Delhaize Group, Food Lion began in 1957 as a one-store operation in Salisbury, North Carolina, under the name Food Town and the direction of Ralph W. Ketner. After the introduction of the “Lowest Food Prices in North Carolina” (LFPINC) concept in 1968, the grocery chain grew from seven stores to approximately 800 in 1991, the year in which Ketner retired. Before then in 1983, the company had changed its name to Food Lion. During the early 1990s, the supermarket chain went through legal battles that curbed its incredible and rapid growth. Under the leadership of DelHaize Group executives, the company survived the legal challenges, and in February 2007, it employed 73,000 workers in nearly 1,200 stores and served ten million customers in eleven states.
The regional supermarket chain had humble beginnings. With many years experience in the grocery business, Ralph W. Ketner, Brown Ketner, and Wilson Smith put up $62,500 capital and convinced many Rowan countians to buy shares so that they could open Food Town #1 in Salisbury. During its first decade, the company experienced moderate growth: seven stores and $5 million in sales by 1967.
The cost-cutting theory (LFPINC), implemented in 1968, launched the small-town North Carolina business into the spotlight as a regional and national competitor. With its executives risking the company by drastically lowering prices on all items, Food Town needed at least a fifty-percent increase in sales by year’s end. Fortunately for stockholders, the risk paid off. Sales increased to eighty-percent that year. From 1967 to 1991, the year in which Ralph Ketner retired, Food Town/Lion’s thirty-five percent annual growth rate (226 stores by 1983 and 475 by 1986) exceeded the growth rates of Winn-Dixie and Wal-Mart. Many have stated that this growth created more millionaires out of its stockholders than had any other business in North Carolina.
But the chain’s growth produced problems. First, advertising and cost-cutting strategies created stiff competition among southeastern grocers, and Food Town was sued for using slogans that allegedly misrepresented its competitors and misinformed the public concerning the extent of its low prices. A court ruled in the early 1980s that Food Town must change its slogan from “Lowest Food Prices” to “Low Food Prices.” Second, the Federal Trade Commission in 1976 ruled that Food Town could not merge with Lowe’s Foods of North Wilkesboro since the merger might create a monopoly in North Carolina. Third, the company started stores in states where other grocery stores and chains named Food Town had been established and were still in operation. To avoid legal battles, the Salisbury-based company changed its name to Food Lion in 1983.
During the early 1990s, the chain opened nearly 100 stores a year, but legal troubles plagued the now Delhaize Group-owned company. Millions watched, for instance, a Primetime Live report showing Food Lion employees mishandling meat and working in unsanitary conditions. The episode stymied the company’s rapid growth. Food Lion sued ABC for fraud and claimed that the television network had used illegal methods to obtain the footage. Food Lion was awarded $5.5 million in damages, which a judge reduced to $316,000. A U.S. Appeals Court, however, later ruled that Food Lion did not suffer direct harm and rescinded all damages. Also in the early 1990s, many alleged that Food Lion had violated Federal Labor Standards Acts (FLSA) regulating overtime, minimum wage, and child labor laws. Consequently, Food Lion paid $16.2 million–at the time the largest settlement from a private employer for violating FLSA standards–to settle claims. Since these legal troubles, the number of Food Lion stores has grown, but the chain’s growth has been significantly slower than it was during the 1980s.
Under the leadership of DelHaize Group executives, Food Lion in February 2007 employed approximately 73,000 workers in almost 1,200 stores and served nearly 10 million customers in eleven states: Delaware, Florida, Georgia, Kentucky, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia. The grocery chain has seven distribution centers: three in North Carolina, and one each in Virginia, Tennessee, South Carolina, and Pennsylvania. The company has also started what the grocery industry calls market renewal projects. For example, some Food Lion stores have been remodeled and, due to market-research findings, been renamed Bloom or Bottom Dollar.
The company donates to various charities, including the Children’s Miracle Network, America’s Second Harvest Food Banks, Easter Seals, the United Way, the American Red Cross, and schools near its stores.
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