BIDDEFORD — An old family feud that has escalated to a battle of wills between employees and executive leadership of Market Basket supermarkets is certain to have a chilling effect on its expansion plans in Maine.
Demoulas Supermarkets Inc., the Massachusetts-based company that owns and operates Market Basket grocery stores, including one in Biddeford, enraged many of its roughly 25,000 employees by firing their beloved longtime CEO, Arthur T. Demoulas, in late June.
Workers at all levels, from grocery baggers to district managers, have been outspoken in their opposition to Demoulas’ ouster by the company’s board of directors, made up of family members who share ownership of the privately held chain.
Employees say they support Demoulas for his personal touch – tales of him visiting ill employees in hospitals abound – his vow to keep the chain family-owned and, not least, his commitment to support a company fund that pays annual bonuses to employees. They worry that their new leaders will cut pay and benefits, although the company’s new leaders said they remain committed to customers and workers.
A cousin of Demoulas who controls the board led the push to remove him as CEO, the culmination of a decades-long dispute over ownership rights and a difference of opinion about the company’s recent, rapid expansion.
In response, workers have posted signs and placed petitions inside Market Basket stores to garner public support for Demoulas’ reinstatement. They have protested by refusing to make deliveries, leaving parts of the produce and fresh meat sections understocked or empty in stores.
At the Biddeford store Saturday, nearly every employee, including the managers, wore buttons with Demoulas’ picture and the words “I Believe” underneath.
Two worker demonstrations have been organized at the supermarket’s headquarters in Tewksbury, including a rally Monday at which thousands of employees – among them several from the Biddeford store – and supporters gathered to demand that Demoulas be rehired as CEO. Eight company employees involved in organizing the demonstrations were fired over the weekend.
There are 71 Market Basket stores in Massachusetts, New Hampshire and Maine. The company opened its first and only Maine location in Biddeford last August.
In March, company officials said sales at the Biddeford store were so strong that they would consider opening other locations in southern Maine, although they did not provide any specifics.
Now those plans are on hold, said Micum McIntire, store director at the Biddeford Market Basket.
“It’s a very big concern,” McIntire said Monday, noting that when Demoulas decided to open the Biddeford store, it never was intended to be the only one in Maine. But given that seven planned Massachusetts Market Basket locations in various stages of completion have been put on hold, he said, the chances of a new store opening in Maine anytime soon are slim to none.
Meanwhile, sales have taken a significant hit at the Biddeford location, McIntire said. Because the store has been open less than a year, and sales always increase during the summer months, it is impossible to quantify just how much the empty shelves and calls to boycott Market Basket have cost the store in revenue, he said.
In the Biddeford store’s produce aisle Monday, misters sprayed down on mostly barren shelves stocked only with kale and cilantro. In the fresh meat aisle, the entire poultry section was empty.
Calls to Demoulas’ corporate headquarters went directly to a recorded voice saying that the switchboard was closed, and Arthur T. Demoulas could not be reached for comment Monday. But Monday night, he issued a statement urging the company to reinstate workers who were fired for protesting to demand his return, The Associated Press reported.
Demoulas said the workers shouldn’t be punished for their dedication, and that the company’s success is because of its business model and its “impassioned” team of workers, according to the AP. “This is not about me,” he said.
Karen Rich, a commercial broker with Portland-based Cardente Real Estate, said the internal strife at Demoulas Supermarkets escalated around the time the Biddeford store was completed, making it the last Market Basket location to open.
“They put a hold on opening any new stores,” said Rich, vice president and partner at Cardente.
Among the chief concerns expressed by Market Basket employees in recent weeks is that the company’s new leadership could sell the supermarket chain.
Rich said she does not have inside knowledge of the company’s plans, but that its popularity and profitability would make it “an appealing acquisition target.”
“They’ve done such a good job, obviously (in spite of) a lot of internal strife going on,” she said.
Demoulas was fired June 23 by a board controlled by his cousin Arthur S. Demoulas. Both are grandsons of the chain’s founder, and their feud dates back decades.
According to news reports at the time and a 1990 lawsuit, the rift between Arthur T. and Arthur S. Demoulas began with their fathers, Telemachus “Mike” and George Demoulas, respectively.
Mike and George purchased the company from their parents, the grocery chain’s founders, Athanasios “Arthur” and Efrosini Demoulas, in 1956. In 1971, George died of a heart attack, setting off a chain of events that caused the family’s persistent feud.
Several years after his death, George’s heirs accused Mike of cutting them out of their share of the company. A Massachusetts judge agreed with them in 1994, ruling that Mike Demoulas had committed fraud and ordering him to pay the plaintiffs $500 million in the form of a 51 percent share of the Market Basket chain.
Since then, the board of directors has remained narrowly split between those loyal to Arthur T. and Arthur S. The former CEO survived a previous effort to remove him in July 2013, keeping his job by a single vote.
The company, known for its low prices, said in a statement Monday that eight employees were fired over the weekend because “their actions continued to harm the company, negatively impacted customers and inhibited associates’ ability to perform their jobs.”
At Monday’s rally in Tewksbury, one of the fired workers, Steve Paulenka, a former facilities and operations supervisor, estimated the crowd at 5,000 people.
“You go back to your stores. Shut it down,” Paulenka told a cheering crowd.
Under Arthur T.’s leadership, Market Basket employees have enjoyed profit-sharing bonuses and compensation that is higher than the industry average. The company’s new co-chief executive officers, business consultants Felicia Thornton and Jim Gooch, have said they do not intend to reduce employees’ pay.
In an open letter to its customers published Saturday in The Boston Globe, Thornton and Gooch apologized to shoppers.
“We recognize that transitions aren’t always easy and appreciate that this has been an emotional time for many associates,” the letter said. “Unfortunately, in response to the recent management changes, some have lost sight of the top priority – taking care of you – and instead have engaged in actions that harm Market Basket’s reputation and prevent us from meeting our obligations to you.”
Some Massachusetts lawmakers have called for a boycott of the company, led by state Sen. Barry Finegold, D-Andover, whose district includes the company’s headquarters in Tewksbury. As of Monday, 37 state lawmakers and mayors had agreed to encourage constituents to stop shopping at Market Basket until Arthur T. Demoulas is reinstated, said Finegold, who attended Monday’s rally.
Biddeford Market Basket shopper Robin Acker said Monday that neither employee disputes nor partially empty shelves would stop her from shopping there.
“We’ve been Market Basket fans forever,” said Acker, who previously lived in Massachusetts. “We will figure out a way to make do until (the missing inventory) comes back.”
Staff Writer Edward D. Murphy and The Associated Press contributed to this report.