Roundy’s To Exit MN, Sells 18 Rainbow Stores

Roundy’s announced plans to vacate the competitive Twin Cities market, starting with the sale of the majority of its local Rainbow brand grocery stores.

More than a dozen Twin Cities grocery stores are changing hands, significantly altering the local grocery store landscape.
 
Roundy’s is selling 18 Rainbow brand grocery stores to a consortium of grocery retailers including Supervalu, Inc., and Lund Food Holdings for $65 million.
 
Eden Prairie-based Supervalu, which owns Cub Foods, said 10 of the stores will become Cub branded locations, two will become Byerly’s stores (owned by Lund Food Holdings), and six will remain Rainbow brand stores.
 
Supervalu partnered with Minnesota-based companies Jerry’s Enterprises, Haug Enterprises, Radermacher Enterprises, and Lund Food Holdings to execute the deal, which is expected to close by the end of this summer.
 
Milwaukee-based Roundy’s said in addition to the 18 units sold it is actively seeking buyers for its remaining nine Rainbow stores in Minnesota so that it can fully exit the Twin Cities.
 
“The economic downturn over the last few years, coupled with an increased competitive footprint in the Minneapolis/St. Paul Market, has made it difficult for Roundy’s to keep the Rainbow banner competitive,” Roundy’s President and CEO said in a statement. “However, we believe the sale of these Rainbow stores to this group of local operators will provide those stores better stewardship in serving their communities in the Minneapolis/St. Paul market going forward.”

 
Supervalu said it would maintain 100 percent ownership of three of the Cub stores, majority ownership of two Cub stores, minority ownership of three Cub stores, and 100 percent ownership of two Rainbow stores. Supervalu paid $35 million of the total purchase price, in cash, plus the cost of inventory that will be purchased at the closing of the deal.
 
Lund Food Holdings acquired three of the Rainbow stores, located in Woodbury, Eden Prairie, and Plymouth. The Woodbury and Eden Prairie stores will be converted to Byerly’s stores while the Plymouth location will remain a Rainbow brand store.
 
Lund said all of the 250 current Rainbow employees at the locations will have the opportunity to continue working for the stores after the deal closes. The company will conduct extensive remodels of the Woodbury and Eden Prairie locations in 2015.
 
In addition to the three locations Lund purchased, the following Rainbow stores were bought:
 
The 10 new Cub stores will be located at:

  • Chaska —200 Pioneer Trail
  • Eagan—1276 Town Centre Drive
  • Lakeville—17756 Kenwood Trail
  • Minneapolis (Uptown)—1104 Lagoon Avenue
  • Minneapolis (Quarry)—1540 New Brighton Road
  • Oakdale—7053 10th Street North
  • Plymouth—10200 6th Avenue North
  • Roseville (includes standalone liquor store)—1201 Larpenteur Avenue
  • St. Louis Park (includes standalone liquor store)—5370 16th Street West
  • St. Paul (Arcade)—892 Arcade Street

The five other stores that will remain Rainbow brand will be located at:

  • Maplewood—2501 White Bear Avenue
  • Minneapolis (Lake Street)—2919 26th Avenue South
  • Richfield—140 West 66th Street
  • St. Paul (Midway)—1566 University Avenue West
  • West St. Paul—1660 Robert Street South

After the deal closes, Cub Foods will have 77 total stores, 76 of which are in Minnesota—with one store in Illinois.
 
As a result of the deal, as well as a need for seasonal employment, Supervalu said that it expects to add more than 1,000 new jobs in the coming months for its Cub stores.