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Mi Pueblo markets files for Chapter 11

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http://www.mercurynews.com/business/c...

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  1. i was curious where the $$ came from for Mi Pueblo's rapid growth. guess the profit margains weren't high enough to satisfy Wells Fargo so they tried to cut off the loan.

    36 Replies
    1. re: shanghaikid

      Dang, I loved the one in Fruitvale. Hope they are successful at reorganizing.

      1. re: grayelf

        Per that article the stores are still open.

        1. re: Robert Lauriston

          Yeah, apparently they're not really in trouble, they're current on all their obligations, but their bank isn't happy with them.

          1. re: Ruth Lafler

            Numerous grocers, including Safeway in the early 90's, emerge from Chapter 11 reorganization in a slenderized, successful fashion. The process enables them to reject long term leases on underperforming stores, shutter them, re-negotiate union contracts and keep the good stores. Yes, some landlords get stiffed.

            1. re: Veggo

              Mi Pueblo locked out 300 employees in San Jose a few years back because they voted to talk to unions. They were axed.

              Also, ironically or hypocritically, the CEO/founder, a former undocumented worker himself, checked off on e-verify, Homeland Security's special way of tracking immigrants, illegal or otherwise.

              http://www.marinij.com/business/ci_21...

              I use to like MP quite a bit but no longer. I no longer shop there.

              1. re: Veggo

                Glad to hear some think they can come out of this. The linked article was not so sanguine. I didn't realize that supermarkets operated on such a razor's edge.

                1. re: grayelf

                  Walmart operates on a 3.5% margin, grocers about half that. The initiative in D.C. for all employers to pay a "living wage" of $12$/ hour is a dealbreaker for Walmart. The 3.5% disappears.

              2. re: Ruth Lafler

                The bankruptcy petition and schedules are 466 pages, and I haven't taken a look at them. I cannot imagine that there is only one creditor at issue. Their secured line of credit is probably being squeezed/cut off due to terms of the note (which may include bank balances, balance sheet, etc.) Ch. 11 is a terribly expensive and cumbersome process, and one doesn't generally go there unless one is in trouble. The only really solvent debtor that I recall is the Sizzler case of many years ago. They were not in trouble.

                1. re: lmnopm

                  Andronico's reorganized successfully a few years ago. They expanded from seven stores to ten, got too far in debt, and are now down to five.

                  1. re: Robert Lauriston

                    They were bought out by a Texas investment firm, the same folks that bought AG Ferrari just about the same time.

                2. re: Ruth Lafler

                  can't see Mi Pueblo coming out of Chapter 11 the same, definitely will be some store closures

                  reason-Mi Pueblo target customer, immigrants, have been shrinking for years, MI Pueblo will have years of no growth or a steady decline in sales for years.

                  not a good sign. am sure Well Fargo saw thus.

                  looks like Mi Pueblo expaned at the wrong time.

                  1. re: shanghaikid

                    I think there are plenty of Latino immigrants, just not enough to keep up with the expansion of supply. There are currently at least five Latino supermarkets in the Friutvale alone.

                    1. re: Robert Lauriston

                      "just not enough to keep up with the expansion of supply"
                      you mean not enough customers for the supermarts?

                      btw, there's 3 supermarts on high st alone, at least 2 on fruitvale ave, a couple on foothill, plus the produce markets plus the minimarts run by asians and arabs. would say at least 10.

                      1. re: shanghaikid

                        I was at the High St Mi Pueblo on Saturday and the lines for the meat counter and prepared foods were quite long. I snagged some nicely-cleaned baby octopus for $2.50 a pound.

                        1. re: shanghaikid

                          Right, the number of Latino supermarkets and groceries seems to have expanded exponentially. Somebody (Mi Rancho?) just opened one a block from Mi Tierra in Berkeley.

                        2. re: Robert Lauriston

                          Not to mention Latino immigrants aren't the only people who shop there. Although the number of new immigrants has slowed, there are plenty of existing immigrants, former immigrants, children of immigrants, etc. and it was an underserved population to begin with.

                          The only problem seems to be that the holder of their line of credit seems to think they're going to have problems in the future.

                          1. re: Ruth Lafler

                            More gringos! My hispanic markets are more economical than national chains for the items I want, and some items I can't get elsewhere.

                            1. re: Veggo

                              Exactly why I shop there. Plus, it's about a million times more fun than gringo supermarkets (of my two closest supermarkets, one makes me feel like a rat in a maze and the other is quiet as a morgue), although during the holidays you may never get "Feliz Navidad" out of your head!

                              1. re: Ruth Lafler

                                The Jose Feliciano version?...:)

                                1. re: Veggo

                                  That, and more!

                                2. re: Ruth Lafler

                                  i actually feel that Mi Pueblo is pretty gringo. lots of 'American brands'. but i think its a function of Latinos also consume lots of American products.

                                  1. re: ckshen

                                    It's not an import store, it's a supermarket!

                              2. re: Ruth Lafler

                                While it is true that the stores have stiff competition in some parts of the Bay Area, Mi Pueblo has gone into areas that are underserved too. East Palo Alto had no full-service grocery store until it opened there . . . and that's a great branch, btw. On the Central Coast, Seaside had a similar situation and offered up incentives for Mi Pueblo to open there. And in Salinas, Mi Pueblo took over a long abandoned Safeway that the City had been trying to fill for years (and probably earned some incentives).

                                Walmart has earned praise from the First Lady for bringing fresh produce to underserved areas. Personally, I'd much rather see a local operator like Mi Pueblo filling those shoes in the community.
                                http://www.washingtonpost.com/blogs/s...

                                Mi Pueblo in East Palo Alto
                                http://chowhound.chow.com/topics/681270

                                1. re: Melanie Wong

                                  The one in Oakland was an abandoned Safeway as well (you can still see parts of the stone facade characteristic of Safeway stores built in the '50s). There are lots of other "supermercados" in that area, but none are big enough to be considered true supermarkets.

                                  1. re: Melanie Wong

                                    Love the EPA branch - I feel like I'm at a fiesta every time I shop there! Beautiful, clean store with good prepared food, produce, bakery and meat. Hope it won't be one of the stores they close. I was so shocked when I heard the story of the bankruptcy filling on the radio the other day.

                                    Totally agree with your comments: Great store in an under-served area. An important community asset.

                                2. re: Robert Lauriston

                                  Some within the Latino community (and beyond) are boycotting Mi Pueblo for their e-verify stance, which many see as hypocritical given the founder was once undocumented himself.

                                  Mi Pueblo might learn something from the GOP and prop 187, that there can be negative effects from supporting "unfriendly" policy. In this case, California turned blue and the red party is essentially dead in the state, admitted by themselves.

                                  I don't think this is what caused the chapter 11 but it certainly can't help. It would be like a popular African American establishment dissin' MLKJr. Day...just not smart in context of the community.

                                  1. re: ML8000

                                    Are you also boycotting the other 400,000 businesses that use e-verify?

                                    Mi Pueblo's college scholarship program is open to undocumented applicants. At least it is in the Salinas area as far as I can tell from the posters.

                                    1. re: Melanie Wong

                                      Nope, just boycotting the ones that have a hypocritical bend, like a CEO who came to this country undocumented who now runs a company aimed very specifically at the Latino community.

                                      But it's not just e-verify. MP also locked out 300 workers in San Jose when they wanted to talk about unions. I wonder what John Steinbeck would say about that, and e-verify.

                                      Beyond that, it's nice MP is giving out scholarships. It "almost" makes me want to shop there again. I actually like MP but e-verify and union busting are things my dollar won't support.

                                      1. re: ML8000

                                        It seems pretty clear to me that only a tiny minority of people in the Bay Area (mostly union employees and activists and left-wing politicians ) know or care about grocery stores' labor track records. If that weren't the case, it would be Safeway that was adding new stores in Berkeley, not Berkeley Bowl and Trader Joe's.

                                        Same only more so for E-Verify.

                                        I don't think Mi Rancho's debt problems are a valid excuse for slagging it here on tangential political grounds.

                                        1. re: Robert Lauriston

                                          Thank you for letting everyone know where you stand.

                                          As I mentioned, some people care about these things related to food: vegan, locavore, organic, humane treatment of animal, as well as massive quantities at low, low prices, tasty, exciting and orgasmic.

                                          My interest besides tasty is that humans involved in the food chain are treated reasonably fair. That of course is a pretty high order because at most stops along the food chain that's not happening: from the farm labor to the line chef.

                                          As for Mi Pueblo's (not Mi Rancho) debt problem, e-verify and union busting. If it were only one issue, yeah what's the big deal but combined it is unsettling so I simply choose not to go there.

                                          It's a shame because I liked the place. But in the current American model of governance, one of the few ways to voice your opinion is with your dollar.

                                          1. re: ML8000

                                            Some people won't shop at Berkeley Bowl, Trader Joe's, or Whole Foods based on similar reasoning, but to my knowledge they're better places to work and shop than the union supermarket chains other than Costco.

                                            I vote with my money by buying almost all of my food direct from the producers.

                                    2. re: ML8000

                                      I think a large, high-profile Latino-owned-and-operated business has to be particularly careful about hiring illegals. Maybe it's hypocritical, but he owes it to his employees and investors to be above reproach in his business practices.

                                      1. re: Ruth Lafler

                                        Methinks the hypocritical stuff is going to bite the CEO on the butt and not in a good way. It's a shame because I use to like MP. I hope they succeed, I just won't be supporting them.

                                        I guess my take on this is something like: there are ethical vegans/animal lovers, ethical locavores, organic only, etc. but this country still has a MAJOR issue with treating people in the modern food chain fairly, be it healthcare coverage or a decent wage.

                                        Some people require their food to be: local, organic, ethically produced, special. I just want ALL the people involved in the food chain treated fairly.

                                        1. re: ML8000

                                          Yeah, well how fair is it to "people in the food chain" if he gets busted for knowingly hiring illegals and has to lay people off and/or close stores and/or go permanently bankrupt, leaving his suppliers unpaid? A business with a nearly 100 percent Latino workforce is a ripe target for an enforcement action.

                                          1. re: Ruth Lafler

                                            I wish I had an answer. Unfortunately it's a complex question that only a few people have to made decisions on, beyond the "vote with your dollar" logic.

                                            For MP it's dicey for sure, likely a no win. I can only go with what I know and how I feel about it, just like their CEO had to go with what he knew.

                                            The only point I have is if your success relies on a certain demographic/populations, it behooves you to carefully consider the situation. The GOP/prop 187 thing is a perfect example, although not retail sales.

                                            1. re: ML8000

                                              I think what he can do is what he is doing: running a successful business that provides work for large numbers of immigrants and doing what he can to help illegal immigrants in other ways.

                                              The anti-union thing is a different matter -- I am disappointed to hear that.

                        3. Every time I walk into that place I fill my cart. The variety of products not so easily found elsewhere, as well as the atmosphere, have made me a big fan of the one on High Street. So many kinds of queso fresca, salsas, those hefty tortilla chips, at least 3 different kinds of tripe, beef tongues and other things my local butcher doesn't carry, at excellent prices. In the last year I've seen that many people other than immigrants have discovered that store, including neighbors and the local fire station.
                          Just hope they don't emerge from bankruptcy on the backs of the people who work there. I'll protest e-verify anywhere, but presume that Safeway and other chains use it. Correct me if I'm wrong.

                          1 Reply
                          1. re: Kayde

                            safeway only uses it in arizona, where it's required.

                          2. The other chain similar would be Chavez Markets - any comment on their labor policies?

                            I could easily favor Chavez over Mi Pueblo in terms of my daily buying habits.