Whole Foods Market is in talks to buy or take over leases for half a dozen Johnnie’s Foodmaster locations in eastern Massachusetts, possibly bringing an end to one of the last urban family grocery chains, according to several real estate officials briefed on the deal.
Negotiations are still in the early stages, but Whole Foods wants to move into six of the 10 Johnnie’s Foodmaster sites in Arlington, Brookline, Charlestown, Melrose, South Weymouth, and on Beacon Street in Somerville.
If the deal goes through, Whole Foods will increase its presence in Massachusetts by nearly 30 percent at a time when rivals like Market Basket and Wegmans Food Markets are stepping up expansion efforts. Whole Foods, which in the past two decades has taken over other small local grocery chains — including Wild Oats and Bread & Circus — currently operates 21 stores in the state and has another two planned for Boston’s South End and Lynnfield.
Over 65 years, Johnnie’s Foodmaster has built a reputation around low prices, friendly managers, loyal customers, and old-school decor — including carpeted aisles. John DeJesus Sr. debuted his first food market in East Cambridge in 1947, and his son, John A. DeJesus, now oversees the chain. It is unclear whether Johnnie’s Foodmaster would continue operating the remaining four stores in Lynn, Medford, Whitman, and the Somerville location on Alewife Brook Parkway if it finalizes an agreement with Whole Foods. DeJesus did not return several messages for comment.
A spokeswoman for Whole Foods would not discuss the matter and said the Austin, Texas-based upscale chain only discloses new locations in its earnings reports. The real estate officials who were briefed on the negotiations requested anonymity because the talks to take over Johnnie’s Foodmaster locations are ongoing.
The six sites in play would fit into the smaller format stores that Whole Foods has focused on in recent years, including one it opened last year in Jamaica Plain. During a conference call in July, company executives discussed the success of the smaller markets. These stores, at 38,000 square feet, have produced average weekly sales of $575,000, or $786 per square foot, according to Walter Robb, Whole Foods cochief executive.
In recent years, Johnnie’s Foodmaster has also experimented with new formats in the face of increased competition from budget-oriented grocery chains such as Price Rite and Market Basket. The company had roughly $150 million in sales in 2011 according to the Griffin Report of Food Marketing, a Duxbury trade publication. The Revere Johnnie’s Foodmaster was converted to a Save-A-Lot grocery store two years ago. In an interview with Supermarket News in 2010, John A. DeJesus said he was looking at each store to determine whether the location appealed more to upscale or price-conscious customers. He said he was considering switching some of the other Johnnie’s Foodmaster locations to Save-A-Lots. The Revere store has since closed.
Kevin Griffin, publisher of the Griffin Report of Food Marketing, said Whole Foods could be an attractive out for Johnnie’s Foodmaster because it is usually difficult to exit a family-owned grocery business and get paid for it. The deal makes sense for Whole Foods, he said, because the company is attempting to open smaller markets and defend against rivals.
Cushman & Wakefied, a commercial real estate firm, is representing Johnnie’s Foodmaster in the talks with Whole Foods.
“Boston is a dynamite market for Whole Foods because of the demographics and density and affluence,” Griffin said. “But it’s also definitely a defensive move against Wegmans because they made it pretty clear they are interested in Boston and urban locations.”
If the plan moves forward, reaction from communities where Johnnie’s Foodmaster stores are located is likely to be mixed, Griffin said, because Johnnie’s Foodmaster has a solid customer base of people who rely on the easy access and affordable prices, and believe in buying food from a locally owned company.
“I’m sure there’s going to be some people saying, ‘Oh, here come the yuppies. Just what we need is to pay three times as much for ground beef,’” Griffin said. “And others will welcome it as a recognition that their neighborhood has been gentrified.”