Fort Bragg Planning Commission recommends that City Council approve Grocery Outlet asks

FORT BRAGG, 5/11/23 — The big showdown over Grocery Outlet that many predicted didn’t happen.

Local residents encouraged the Fort Bragg Planning Commission to approve the proposed Grocery Outlet Store on the south end of Franklin Street. Fort Bragg residents had clashed on social media prior to the meeting, but everybody was polite at Wednesday’s meeting.

Fort Bragg Police Capt. Thomas O’Neal watched the meeting from the back corner of Town Hall and left amid the calm and polite meeting after about an hour. With only a couple exceptions, the 17 speakers at the meeting and on Zoom supported the project, or were neutral and wanted to talk about improving the traffic flow. Apparently the culture has  changed since two years ago, when many more opposed the Grocery Outlet and a suit was launched against the project. At the meeting, despite the group formed on Facebook to oppose Grocery Outlet, opposition was very muted. The Planning Commission certified all of Grocery Outlet’s requests, with conditions and passed the final decision to the Fort Bragg City Council. 

In 2015, community had mounted strong opposition to Grocery Outlet’s previous planned location, on the beginnings of Fort Bragg’s headlands, adjacent to Mendocino College, with the store being the first thing someone might see coming off Highway 20. That plan brought a firestorm of protest, as had an effort to site a gas station there. Some of those critics now say they believe the new location on Franklin is appropriate. When Grocery Outlet came back with a plan for a store on Franklin, locals were more mixed on the idea. But Wednesday night, they favored the plan.

After a two-year legal process to complete an environmental impact study for the Franklin location demanded by local residents (a suit was filed to insist on a study rather than simply a negative declaration), the Grocery Outlet was approved by the City Council and the planning commission. Although the study was not demanded by the city, Grocery Outlet chose to complete it to avoid lengthy litigation, Grocery Outlet attorney Jim Moose said. On Wednesday night, Fort Bragg’s Planning Commission again recommended to the City Council that the project be approved. So far the city has done nothing but vote in favor. The city does not charge sales taxes on groceries. The proposal also met all legal criteria for the site, and thus couldn’t legally be refused even if the city wished to do so.  Most speakers said low-priced food would provide a needed lifeline for Fort Bragg, where the average adult annual income is about $30,000. 

Paul Clark, a community leader in favor of private property rights and a real estate agent and broker since the 1960s, described the many efforts of Grocery Outlet over decades to have a store in Fort Bragg. He said the company has been flexible and committed to coming to the coastal community.

The decision now moves to the City Council and possibly to the California Coastal Commission, consultant Marie Jones explained. Jones has been dealing with Grocery Outlet’s efforts since she was Fort Bragg’s Community Development Director and is handling this project for the city. She is also a Mendocino County Planning Commission member. Jones said it wasn’t clear if such an appeal could be made. Clark said later he didn’t think that there could be an appeal, because it had not been possible the first time through.

The project would include the demolition of an existing 16,436SF vacant former office building and parking lot and wooden fencing along the property line, and the construction and operation of a 16,157SF, one-story, retail store with a 55-space parking lot along with improvements and other new infrastructure. The store would be operated by 15 to 25 full-time staff and two managers and would be open from 9:00 a.m. to 10:00 p.m., seven days per week.

In contrast, Harvest has 175 employees between its three stores and 135 at its Fort Bragg store. Safeway has 130 employees. Along with Down Home Foods, Harvest sells a higher percentage of locally produced food and products than others. Grocery Outlet could include local products if requested by residents, a representative said. No other statistics on local grocery employment were immediately available. Safeway, though unionized, has robotic checkers but also retains traditional checkers.

While people at Wednesday’s meeting said Grocery Outlet was unionized, that is not true at more than 99 percent of its stores. SEC filings report that two Grocery Outlet stores are unionized out of 450. More than one person said Safeway did not have benefits, yet both stores provide benefits. On company review sites like GlassDoor, Grocery Outlet’s benefits were praised, as well as employees receiving 10% off on groceries. But according to multiple reviews, the rate of pay got thumbs-downs, with workers saying they made minimum wage and raises were rare.

Representatives of Grocery Outlet told the audience that the stores are not franchises but operated in a unique partnership agreement by an independent operator, who does the hiring and makes all the daily decisions after products are delivered. The out-of-town partners take a sizable cut each year the store operates, hoping to make big profits if the store is successful and can be run at a low cost in the long-term. 

Best Development Group is the Grocery Outlet builder, on a 1.63-acre site located at 825, 845, and 851 S. Franklin Street. The existing building was once a county office building but a controversy over high rents and the quality of the building resulted in the county moving out nearly a decade ago. The owners have been seeking a buyer ever since. The site is owned by Dominic and Juliette Affinito and is located in the Coastal Zone within the city limits. The City’s General Plan designates the site as Highway Visitor Commercial. No changes to the site’s current land use or zoning designations have been proposed.

The Planning Commission recommended that the city merge the three parcels. After construction, the store would receive approximately four semi-trailer truck deliveries per week. Typically, trucks would arrive around 7 a.m. and leave before 9:00 a.m. Additional deliveries would be made daily by four to five smaller trucks that would typically arrive in the morning and leave shortly afterward. The proposed project does not meet the standards for a big box store  (over 30,000SF). Grocery Outlet is considered a formula business, the staff report said. Grocery Outlet representatives contested this assertion. Formula businesses are regulated differently than locally owned businesses. Many locals have opposed chain ownership, where local products are not widely available and profits are sent out of the community.

Veronica Vee Vargas, entitlements manager for Grocery Outlet, said she thought it was unlikely that Grocery Outlet would join the movement toward automation. “I don’t think so,” she said. The commission did not make providing a certain number of jobs one of its many conditions. When asked to add in certain suggestions, city staff explained that doing so might make it necessary to start over part of the process.

She said the stores were smaller than big box stores where this is happening. The Dollar Tree store in Boatyard Center is a bit smaller than the proposed Grocery Outlet, has eliminated its checkers in favor of automated checkout. There is a movement to fully automate many businesses. When asked about starting pay in Fort Bragg Vargas said she could not answer. She said wages are different in different parts of the country. Reviewers on Glass Door report making lower wages than other stores; reported starting wages are a nickel or dime above California’s minimum wage of $15.50 per hour. The proposed store is smaller than two current grocery stores in Fort Bragg, Safeway (~45,000SF) and Harvest Market (36,000SF), but larger than Purity (10,600SF). The proposed Grocery Outlet size is commensurate with other similar businesses, the staff report states. Grocery Outlet often puts its stores in old big box stores but is smaller and more compact. Recently Grocery Outlet and two other stores split up redevelopment of an old Kmart. It was determined that the Fort Bragg building was too old and moldy for repurposing.

The Grocery Outlet store is estimated to achieve annual sales of $6.5 million during its first year of operations, comprising $2.3 million in perishable goods and $4.2 million in non-perishable goods. The study also assumed that 10% of these sales would be to visitors from outside the area. The study inferred that, in subsequent years, annual sales at the Grocery Outlet could be in excess of $7.4 million in sales, which is the national average for a Grocery Outlet store. The primary market area households (defined as coastal Mendocino County from Elk to Westport) are estimated to generate $95 million for food and beverage sales and $31 million in other retail categories. The study estimated Grocery Outlet would impact existing food and beverage sales at other stores by 2.4% in the first year and up to 2.72% in subsequent years. It would impact other existing retailers (general merchandise) by 13.5% in the first year and up to 15.3% subsequent years. The report concludes that: “stores that are anticipated to have food and related sales overlap with Grocery Outlet include the four full-service grocery stores and Dollar Tree. The natural food stores, convenience stores, other stores with substantial food and beverage sales (excluding Dollar Tree), and gas station convenience stores are not anticipated to experience much, if any competitive overlap.” Grocery Outlet representative Jim Moose contested some of the figures on impacts of the Grocery Outlet on existing markets.

Those on the Planning Commission who vote for or against a project are not necessarily in favor or against the proposal overall, but instead certify that all criteria have been met and make a recommendation. In technical terms: the commission recommended that the City Council certify the new Environmental Impact Report for Grocery Outlet; adopt California Environmental Quality Act Findings in favor of the project with conditions; and adopt mitigation monitoring and a reporting program. 

In earlier rounds of Grocery Outlet deliberation, concerns were expressed about the need for many older people living downtown to continue to have access to Purity and Down Home Foods. Fort Bragg has a large number of neighborhood grocery stores such as Colombi Market, Nello’s Market, Larsen’s Cleone Market and B&C Grocery. Many people who don’t drive walk or bike to these stores. Fort Bragg has one of the highest percentages of locally owned businesses in the state, partly thanks to the difficulty getting “over the hill” to Willits and partly because of a tradition of local resilience and ownership. Locals once rebuffed distant owners, including Kmart in the late 20th century and protested the arrival of Starbucks and Taco Bell. 

This reporter publicly contested the widespread assertion that the Fort Bragg Safeway is the highest priced Safeway in the state. This claim was repeated at the meeting and has been a battle cry to those saying stores overcharge here. Safeway officials have discounted it as rumor when asked. This claim has been made in other areas. This reporter asked anyone at the meeting who had proof to send it to frankhartzell@gmail.com. After the meeting, Jones said it could be possible for a municipality to compute income per square foot but didn’t know of any proof of these claims.

Ethos ESG, which rates companies based on sustainability, provided the following rating of Grocery Outlet: Grocery Outlet Holding is a below-average overall performer. With a ‘D’ rating of 38.5 for overall impact (28th percentile compared to all companies), Grocery Outlet Holding ranks 38th out of 56 industry peers, behind Sprouts Farmers Market, Brazilian Distribution, Natural Grocers by Vitamin Cottage and 34 others, and ahead of Murphy, Loblaw, Albertsons and 15 others. On top material causes for Grocery Outlet Holding’s industry (Food & Beverage Retail), Grocery Outlet Holding performs poorly in Child and Maternal Health (34.1 score), No Poverty (10.7), Fair Labor Practices (20.5) and 3 other causes where it received a ‘D’ or ‘F’ score. Grocery Outlet Holding did not receive an ‘A’ rating on any metric. Grocery Outlet rates an F in Ethos ESG’s charts. There was no rating for Safeway on the site. Safeway is now owned by Albertsons, which had a lower rating than Grocery Outlet.

Grocery Outlet gets lower prices by buying closeouts and food close to its expiration date, according to numerous articles about the store. It began in the 1940s selling government surplus food. A new store just opened in Soledad, which employs 31 people, according to news articles. The chain plans to add at least 25 more stores in California this year. It is one of the fastest growing grocery chains. Its stock is at $30 per share, which is similar to where it started when it went public in 2019. The stock has been a steady performer despite dramatic ups and downs in the overall market.

See our previous reporting on the proposed Grocery Outlet here.

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