Sometimes in business profit trumps other valuable things like employee welfare, customer satisfaction and public opinion. But when those three things have a heavy enough influence over the ability to generate money, the profit trump-card no longer applies. It’s important for businesses to find the right balance between all of these elements in order to remain successful. One family-owned supermarket would learn this lesson the hard way…
In the summer of 2014, the board of directors of a successful supermarket chain ousted the very person who made them such a success because he actually cared about people over profits. When loyal employees found out, however, they decided to fight for their beloved boss…
Chasing the American Dream
In the early 1900s, a Greek couple dreamed of creating a better life for their future family in the land of opportunity. Eventually, they decided to make their dream a reality and left their home in Greece and all of their loved ones to move to the United States of America.
After resettling in Massachusetts, the couple made their American dream a reality when they opened up a grocery store, which they called Market Basket, in the Acre area of Lowell, Massachusetts. From the very beginning, the couple made it their purpose to keep costs low and quality high.
A Family Business
The family-owned grocery store was a success with the people of Lowell. Over the next few decades, the store’s popularity and success only grew among the community as the couple ran the business together.
Passing Down the Business
In 1954, the couple was ready to retire after building the successful grocery store on their own and decided to sell the family business to two of their six children. The two brothers were dedicated to continuing their parents model of providing high-quality items at affordable prices.
A Death in the Family
For nearly two decades, Telemachus “Mike” and George Demoulas ran the family business together and found great success opening more Market Baskets in New England. However, that suddenly ended when George died in 1971 and Mike became the sole owner of the family business.
A Family Feud
However, George’s family argued they should have inherited George’s rights to the company, and decided to take Mike to court to fight for what they believed was rightfully theirs. After suing Mike for defrauding them, the judge agreed with George’s family.
In 1994, a judge ruled that Mike had defrauded George’s side of the family of both the rights to the company as well as profits. As a result, the judge ordered Mike to give 51 percent of the company to his brother’s family.
Expanding the Business
Over the years, Market Basket continued to expand throughout New England and the family-owned company reached new heights as the independent grocery store chain brought in billions of dollars in revenue.
A Shared Vision
And that success only continued when Arthur T. Demoulas was elected as president of the corporation in 2008 as he was committed to his grandfather’s vision of creating a store that treats both its employees and customers well without cutting corners.
Arthur promised his 25,000 employees that they would always be rewarded for their loyalty and hard work and promised the customer that they would never increase prices just to increase revenue.
During Arthur’s time as CEO of the corporation, he managed to increase sales by a third, added 8,000 employees and sustained one of the highest profit margins in the industry all while maintaining the lowest prices and providing employees with bonuses, retirement plans, and benefits.
The Feud Continues
Despite the success, however, the family was never the same after the feud over ownership. On June 25, 2014, Arthur T. was fired as president of the corporation after his cousin, Arthur S., and other relatives that controlled the board of directors ousted him.
The New CEOs
Yet, Arthur S. argued that his cousin was spending money recklessly and filed a lawsuit against the president, which ultimately led to Arthur T.’s firing. In his place, Arthur S. and the board of directors appointed two new co-chief executive officers.
A Beloved Boss
The company’s loyal employees were heartbroken to see Arthur T., who regularly visited stores and even attended employees’ weddings and funerals, forced to leave the company. But it wasn’t long before they became outraged as the work culture quickly started to change under new management.
Money Over People
Within days, employees started organizing a protest and went on strike to try and force the board to bring Arthur T. back. “The people aren’t as important to the board as the cash is,” said protesters, who were determined to fight the board, who wanted to give more money to shareholders instead of reinvesting the money into the business and employees. “Receiving profit-sharing made workers extremely loyal and aware of wastefulness,” former employee Christopher Ward said. “It’s about more than liking [Arthur T.] as a person … employees are grateful for what he does for them.”
For the following weeks, thousands of employees refused to show up to work and instead spent their time camped outside the company’s headquarters. In addition, loyal middle-class customers refused to shop at the stores fearing the change in management would bring an end to the low prices, which were on average 20 percent lower than competitor’s prices.
Customers Join the Fight
“I’m standing for what’s right – I’m standing for what I believe in,” said employee Jenifer Gil. During the strike, which gained national attention as a fight for the middle class, the company lost about $10 million every single day. The company couldn’t continue to hemorrhage money, so Arthur S. and the shareholders decided they had no choice but to sell their shares to Arthur T. for $1.5 billion in August 2014.
The Boss is Back
As soon as Arthur T. was back in control, employees worked around the clock to get the empty stores up and running again as 88 tractor-trailers of produce, 1.65 million cases of nonperishables, and 2.3 million cases of beef, poultry, and seafood were delivered. “Sales are already at 100 percent of where they were last year,” said Arthur T. He was tasked with stabilizing the company’s finances as well as managing the $1.3 billion debt from buying the shares owned by other family members.
Keeping His Promise
“Look, I’m happy just being a grocer,” said Arthur T., who also vowed not to change the discount pricing or the profit sharing plan for employees. “Every retailer has to stand for something,” he said. “We’re very much grounded in the basic philosophy of driving the ‘more for your dollar’ business model. That’s really something we live by every day … We keep it as simple as possible for people. We keep costs low and quality high. We keep the stores clean and offer service with a smile. And if at the end of the day you have some success, then you share that with the associates.”