The San Bernardino County grocery trade experienced two monumental transitions this month, with the death of Stater Bros. Executive Chairman Jack H. Brown, Jr. and the sale of Ontario-based Cardenas Markets to a partnership including KKR, a New York City-based global investment firm.
Brown’s tenure at the pinnacle of corporate leadership with Stater Bros. began 35 years ago, when he was 43-years-old. Since 1981, he had served in the various capacities of Stater’s president, chief executive officer and/or chairman of the board, at some points simultaneously.
Brown was the son of Jack H. Brown, a deputy sheriff who served as a senior investigator for three successive sheriffs in the 1920s and 1930s – Walter A. Shay, Ernest T. Shay and Emmett L. Shay – handling a number of spectacular cases. Jack H. Brown, Sr. died in 1946 at the age of 57.
Young Jack Brown, Jr. began in the grocery business at the age of 12 in 1950, when he landed a job as a box boy at Berk’s Market Spot in San Bernardino to assist his widowed mother in making ends meet. After graduating from high school and attending college, he enlisted in the Navy, serving on board ships in the Pacific during the early stages of the Viet Nam War. Returning from the Navy, he re-immersed into the corporate world of grocery chains, rising to become a corporate vice president with Marsh Supermarkets, Inc. and then president and CEO of Pantry Markets.
In 1981, he was named the president and CEO of Stater Bros., which was then owned by Petrolane, Inc. In 1983, after creating La Cadena Investments, the name of which was based upon the location of the company’s corporate headquarters on La Cadena Avenue in Colton, Brown leveraged La Cadena Investment’s purchase of Stater Bros. from Petrolane. Stater Bros. continued to operate out of its established warehouse in southeast Colton, proximate to the city limits with Grand Terrace. Under Brown’s guidance, the company withstood a hostile takeover bid in 1986 and 1987 that had resulted in the company moving into a holding pattern and a state of temporary suspension of its corporate growth plans.
Stater Bros, founded in Yucaipa in 1936 by Cleo and Leo Stater was among the first of what are considered modern grocery stores in the country, following upon the model first employed by Fontana-based Crawford Stores during the Depression-era, which allowed customers to access the product on their own without the constant assistance of store clerks, using at first in-store baskets and in subsequent decades, shopping carts.
As Staters grew to include other stores in San Bernardino County – Redlands in 1937, Bloomington in 1938, Colton in late 1938 and Fontana, which was in direct competition with one of the Crawford stores, in 1939 – Stater Bros was transforming toward what were the forerunners of today’s supermarkets. In 1948 in Riverside, Stater Bros opened what was considered to be among the first of such supermarkets in the nation. At nearly 25,000 square feet, the store featured an internal butcher shop, produce section and multiple rows of canned and bottled, as well as refrigerated and frozen, food, what for that era was a state-of-the-art retail establishment. For forty years, Stater Bros. continually expanded as a company, replicating with only minor deviations the 1948 floor plan of the Riverside store, establishing the chain’s 100th store in 1988. That same year the chain reached a sales volume in excess of $1 billion. By 1989, Stater Bros employed more than 7,000, over 4,000 of whom worked in San Bernardino County. This made Stater Bros one of the county’s largest employers.
In 1997, Brown solidified his hold on Stater Bros when La Cadena Investments became the sole stockholder of Stater Bros.
In the late 1990s, Stater Bros was yet using the same 25,000-square-foot model for all of its stores. Early the next decade, Brown committed to a new floor plan for the stores, expanding the square footage under roof by 52 percent to 43,000 square feet and including bakeries and delicatessens.
In 2004, Stater Bros. pulled up its corporate stakes in Colton and relocated its headquarters and warehousing facilities from Colton to a 200-acre site on the former Norton Air Force Base in San Bernardino.
In 2005, Stater Bros lodged its first showing on Forbes Fortune 500 list at Number 493.
In 2008 Brown established Stater Bros. Charities, which supports a variety of charitable organizations.
Stater Bros. has grown grew to 169 stores with gross sales last year reaching $4.5 billion. It was late last year that Brown stepped down as chief executive officer and took the role of executive chairman.
When the 78-year-old Brown died on November 13, he was surrounded by family. He is survived by his wife, Debbie, three daughters; J. Kathleen Smith and her husband Michael Smith, Cara Hoffman and her husband Scott Hoffman and Melissa Koss and her husband Pete Koss. He had seven grandchildren, Kaitlyn, Colleen, Caden, Dylan, Julianna, Jack Ryan and Emma.
Ontario-based Cardenas Markets, which was founded by Jesus and Luz Cardenas as a single store in 1981, was sold to a partnership of the two investment firms, consisting of New York-based Kohlberg Kravis Roberts & Co. L.P. (KKR) and Chicago-based Victory Park Capital, it was announced on November 2.
When the announcement was made, it was also disclosed that the consortium was purchasing the San Jose-based Mi Pueblo stores chain, which, like Cardenas, caters largely to an Hispanic market. It’s based in San Jose and has locations throughout Southern California, including Perris, Santa Ana and Norwalk.
“KKR and Victory Park will be making investments in both Cardenas Markets and Mi Pueblo, along with the ownership of both businesses, including the Cardenas family,” according Cara Kleiman, a spokesperson for KKR. “We are not disclosing financial details, but expect that these new investments will create positive momentum and allow us to better service their communities and valued customers, while also growing Mi Pueblo and Cardenas Markets, creating new jobs, and offering long and rewarding career paths for executives and employees.”
Jesus Cardenas, originally from Jalisco, came to California in 1957 as a worker in the Bracero Program, and worked as a farm worker in the Coachella Valley, Riverside, Oxnard and elsewhere. Initially, the store sold fresh meats, most notably chicken and pork, and processed products such as chorizo and cheese. Included in the markets was a home style kitchen, which sold hot food, including roasted chicken, tamales, carnitas, and the like. The chain featured internal architecture, designs and décor reminiscent of an upscale supermarket in Mexico. The chain has grown to 33 stores, in which a succeeding generation of the Cardenas family – Jesus, Jr., Jose, Lupe and George – are heavily involved following the death of their father in 2013.
There are intentions of expanding Cardenas under its new ownership.
The company employs about 3,000 people. Obtained in the acquisition were all 33 stores throughout Southern California and the Las Vegas area, the Cardenas corporate headquarters located near the intersection of Archibald Avenue and the 10 Freeway in Ontario, and the company’s modernized 470,000-square-foot distribution center at 2501 East Guasti Road.
The Mi Pueblo chain consists of 19 stores in both Northern and Southern California, including ones in Perris, Santa Ana and Norwalk. Mi Puebla sought bankruptcy protection in 2013, exiting in 2014 with a $56 million infusion of rescue financing from Victory Park Capital.
According to industry publication The Shelby Report, the new owners will operate the two chains separately “for the time being.”