Two Ralphs and a Food 4 Less will be closed in May in Los Angeles, a decision the parent company says was accelerated by a municipal mandate requiring workers to earn an extra $ 5 an hour in “severance pay” during the COVID pandemic. -19.
Kroger, of Cincinnati, said he is closing the underperforming stores – Ralphs at 9616 W. Pico Blvd. and 3300 W. Slauson Ave. and Food 4 Less at 5420 W. Sunset Blvd. The stores will be closed on May 15, affecting 289 employees.
Ralphs spokesman John Votava said the companies hope to transfer as many displaced workers as possible to neighboring Ralphs and Food 4 Less.
“We operate seven Ralphs and Food 4 Less stores within a 6.4 km radius,” he said. “We will still operate 65 stores in Los Angeles after these closings.”
Additional closings in Long Beach
Kroger recently announced plans to close Food 4 Less and Ralphs in Long Beach in the face of a similar salary increase that requires the city’s big supermarkets to pay workers an extra $ 4 an hour.
These stores are scheduled to close on April 17.
The average Los Angeles grocery worker earns $ 17.51 an hour, according to a report by Los Angeles’ top legislative analyst, who quoted ZipRecruiter. Kroger said on Wednesday that the average rate for LA Ralphs and Food4Less employees is $ 18 an hour.
‘Thin’ profit margins
In a statement on Wednesday, Kroger said its stores operate at minimal profit margins. Risk payment, the company said, makes it “financially unsustainable” to keep three Los Angeles supermarkets open.
“We never want to close a store, but when you take into account the increased operating costs during COVID-19, consistent financial losses in those locations and an extra payment order that will cost almost $ 20 million over the next 120 days, it becomes if it is impossible to operate these three stores, ”said Kroger.
The Los Angeles City Council voted 14-1 at the end of February to approve the $ 5 an hour increase, which will last 120 days. It applies to non-administrative employees in supermarkets or drugstores that employ more than 300 employees across the country, or more than 10 employees on site. It also includes large stores like Walmart and Target, which dedicate at least 10% of their sales area to supermarkets or drug retailers.
Profits have not declined
Councilwoman President Nury Martinez, who filed the town’s wage increase motion with city councilman Mitch O’Farrell, said the increase is deserved for cashiers, stockists, baggers and others who risked their lives during the pandemic.
“Although these companies made huge profits, they did not reach their employees,” she said during the council’s discussion of the ordinance on February 24. “These companies can pay the hazard allowance, they just don’t want to.”
Stuart Waldman, president of the Valley Industry & Commerce Association, was not surprised to learn of the pending store closings.
“It is frustrating that the city council ignored the main legislative analyst, who warned that the only positive result of ‘dangerousness’ will be higher wages, in exchange for increases in labor costs, higher grocery bills for consumers, pressure on stores in difficulties, reduced hours and layoffs, ”he said. “This was the wrong decision.”
Grocery workers are at the forefront of the crisis, ensuring that people have access to safe and reliable food, he said, and grocery owners have made “massive efforts” and spent millions to keep workers and customers safe.
“I hope the board will consider the long-term economic impacts of this decision,” said Waldman.
Massive profit increases
Profits increased by an average of 39% in the first half of 2020 at supermarket chains and other food retailers, according to a report by the Washington, DC-based Brookings Institution, but front-line grocery workers have reaped little or no benefit.
Kroger’s profits during that period increased by 90%, Brookings said.
The California Grocers Association filed federal lawsuits against Long Beach, West Hollywood and Montebello, seeking to declare the mandatory dangerousness payment by these cities to be invalid and unconstitutional, arguing that grocers will not be able to absorb the additional payment without raising prices, closing stores, reducing hours or firing employees.
A federal judge denied the association’s offer to temporarily overturn the Long Beach decree.
The City News Service contributed to this report.