Tops Markets LLC History
Williamsville, New York 14221-5855
Telephone: (716) 635-5000
Toll Free: 800-522-2522
Fax: (716) 633-0898
Incorporated: 1977 as SB Investors Inc.
NAIC: 445110 Supermarkets and Other Grocery (Except Convenience) Stores
What started as a small association of franchised stores grew into a regional leader and would eventually become part of one of the world's leading retailers, while remaining an integral part of the fabric of the community in which it all began.
- Armand Ferrante opens Great Bear Market in Niagara Falls.
- Ferrante co-founds T.A. Buscaglia Equipment Company.
- Buscaglia is renamed Niagara Frontier Services.
- The company goes public.
- Niagara is taken private in a leveraged buyout.
- Niagara's parent company is renamed Tops Markets and taken public.
- Ahold USA acquires Tops.
- Tops CEO quits in the wake of accounting scandal. of Norte Dame, followed by an MBA from Northwestern University, he gained many years of executive experience at Quaker Oats, where he served as vice-president of Quaker Oatmeal Cereals U.S Business Unit, Vice President-Strategic Development for international foods, and Vice President Marketing of Golden Grain Division. He also worked for Sara Lee Bakery as president of the foodservice division before joining Tops. The first non-Castellani family member to head the company, he took over the management of 238 stores: 73 Tops Friendly Markets, 43 Finast Friendly Markets, 102 Wilson Farms Convenience Stores, 12 Vix Deep Discount drug stores, and eight B-kwik superettes.
According to the Buffalo News, Odland "hit the ground running with a number of initiatives that have given the company a new look, both at its headquarters and in its aisles. Internally, Odland totally revamped the management team, adding many newcomers, including a number of high-ranking women executives and several non-supermarket managers." In addition, he consolidated some administrative functions with other Ahold chains and outsourced other functions, thereby reducing headcount by 160. He sold off Vix to Drug Emporium, and in 2000 bolstered the Wilson Farms division by acquiring the 87-unit Sugar Creek chain of convenience stores, located across New York state. A large portion of the stores were renamed Wilson Farms, thereby giving the Wilson Farms banner an immediate presence in markets that Tops' management deemed desirable. Odland was also instrumental in Tops reversing course on its commitment to the superstore concept. The chain now introduced smaller format, easier-to-shop stores ranging in size from 45,000 to 55,000 square feet. This was part of an effort to promote Tops as a "fast, fun, family" place to shop. The smaller format of the new Tops stores, which featured wider and shorter aisles, was intended to permit quicker access to checkout lines. In addition, freezer cases were designed with more shelving in order to allow for as much variety as Tops superstores were able to offer. The chain also continued its interest in offering non-grocery services, such as in-store banks and full-service pharmacies. In 2000, Tops opened its first fueling stations at its supermarkets, again adding to the chain's emphasis on customer convenience. Another decision as part of an effort to improve service was to close stores from midnight to six a.m. rather than operate them 24 hours a day.
In June 2000, Odland took over as chief operating officer of Ahold USA. He was replaced as Tops' CEO by Frank Curci, who was brought in from Ahold's BI-Lo chain. He oversaw a number of developments in the next two years. In February 2001, Ahold acquired 56 Grand Union stores, 22 of which were converted into Tops Friendly Markets. In April of that year, the company introduced its Tops Xpress convenience store format. Tops sold its warehouse operations to C&S Wholesale Grocers in 2002. That same year, the company celebrated its 40th anniversary, and founder Armand Castellani died at the age of 84.
Tops endured months of turmoil in 2003. There were rumors that Ahold might switch Tops to another of its brand names or even consider selling the chain, although that appeared highly unlikely. In the end, as part of the implementation of a long-term shared services strategy, Ahold decided to consolidate the management of Tops and Giant Food Stores (Carlisle, Pennsylvania). After three years of heading Tops, Curci was slated to become chief operating officer at another Ahold chain, Giant Food of Landover, Maryland, but an accounting scandal enveloped Tops in May 2002 when Royal Ahold discovered millions of dollars in overstated profits in its U.S. operations. Curci promptly resigned, as did several other Tops executives. Tony Schiano, president and CEO of Giant Food Stores, in keeping with the earlier reorganization plan, now took on the additional role of Tops' president and CEO. In charge of running day-to-day affairs as Tops' general manager was Max Henderson, who previously served as Vice President of Operations and Merchandising at Giant-Carlisle.
Tops Markets LLC is a subsidiary of the U.S. operations of Dutch supermarket giant Royal Ahold N.V. In addition to the Tops chain, Ahold also owns Stop & Shop, Giant Food, BI-LO, and Bruno's Supermarkets. With its headquarters located in Williamsville, New York, Tops is comprised of some 160 Tops Friendly Markets, more than 200 Wilson Farms and Sugar Creek convenience stores, and B-Kwik Food Markets superettes. Tops' units are located in central New York and neighboring parts of Pennsylvania and Ohio.
Company Origins in the 1920s
The Castellani family has been the driving force in the development of Tops throughout its history. The roots of the company can be traced to the 1920s, when Ferrante Castellani opened a small neighborhood grocery store in Niagara Falls at a time when orders were still being filled by clerks and before the self-service concept was pioneered by Clarence Saunders and his Piggly Wiggly stores. In the years following World War II, the modern supermarket took shape. Ferrante's son, Armand, would take the family business into this new era. He learned the business from an early age, serving as manager of his father's store when he was only 16. After a stint in the military, he struck out on his own, establishing the Great Bear Market in Niagara Falls in 1951. He then forged a partnership with Thomas A. Buscaglia, a grocery equipment salesmen, to create the T.A. Buscaglia Equipment Company in 1953, a business that equipped grocery stores. Later in the decade, the company became involved in the retail food business, offering support services for an alliance of small company-owned and third-party grocery stores in Upstate New York, primarily in the Buffalo area, which would evolve into the Tops chain. In 1960, the business was renamed Niagara Frontier Services, and in the same year the company opened its first modern supermarket, a 25,000-square-foot store located in Niagara Falls. The Tops Friendly Markets chain was launched in 1962 as a franchise system for supermarkets and the B-Kwik banner was coined for smaller stores.
Thomas Buscaglia died in 1967. Armand Castellani succeeded him as Niagara's chief executive officer and continued the company's growth. A year after his partner's death, Castellani took the company public. In 1969, Niagara opened its first convenience store under the Wilson Farms Neighborhood Food name. As the company became a regional leader, it ceased franchising and began to expand beyond the Buffalo area, by the mid-1970s moving into the Rochester market and northern Pennsylvania. Whenever possible, the company bought out its franchised stores. For the most part, however, Niagara flew under the radar screen. Armand's son, Larry Castellani, told the Rochester Business Journal in 1993, "We were virtually ignored through the '60s and '70s, and I think one of the reasons we were able to grow through our infancy was probably because a lot of the national chains many, many times our size ignored us." Larry Castellani, representing the third generation of his family to be involved in the grocery business, started out at the age of five sorting bottles and sweeping up at his father's Great Bear Market. In 1962, as a teenager, he went to work as a Tops stock boy. He studied business administration at Niagara University but never earned his degree, opting instead for a practical education with the family business. He graduated to director of operations in 1975 and became president of Top's retail division in 1980.
Going Private in the Early 1980s
The 1980s saw changes in ownership for the company. In May 1983, Niagara was taken private in an $82.6 million leveraged buyout by SB Investors Inc., a subsidiary of New York City Investment firm AEA Investors Inc. AEA negotiated terms for the acquisition and arranged for the financing. Of that $82.6 million, $58.6 million came from bank loans and through the issuance of $24.5 million in stock and notes. Armand Castellani, who remained chairman of Niagara, earned more than $11 million in stock and stock options, then turned around and paid $2.1 million to SB Investors for a 14.3 percent interest in Niagara.
Over the next three years, Niagara spent more than $75 million on its largest capital program in company history. Tops moved into the profitable superstore concept, which featured more high margin products and specialty departments. Eight Tops Friendly Markets were converted to superstores and another seven superstores were built during this period. In addition, Tops introduced a number of initiatives, including direct debit service, Instabank ATMS, and the first CarryOut Café service. During this period, Niagara acquired four supermarkets from franchisees and greatly expanded the number of Wilson Farms stores, which increased from 39 in 1982 to 60 by 1986. At this stage, the company also owned and operated 53 Tops Friendly Markets and two B-Kwik superettes. In addition, it franchised another 11 Tops markets, 11 BiKwiks, and six Wilson Farms, along with owning a 10 percent stake in Supermarket Operators of America Inc., a Minneapolis-based company involved in the franchising of Cub super warehouse food stores. For the fiscal year ending June 1984, Niagara generated sales of $705.6 million and posted a profit of $6.15 million. A year later, revenues improved to $742.9 million but net income fell off, totaling $5.42 million.
As was the case with many companies, Niagara was taken private, then spruced up to be once again taken public in an offering that would prove highly profitable to investors. In preparation for a new offering, SB Investors changed its name to Tops Markets Inc. in January 1986. An offering was then completed on March 12, 1986, with 2.12 million shares sold at $19.50 a share. The company netted $18.6 million, which was then used to pay off outstanding debt. However, Tops would be publicly owned for little more than a year. After recording revenues of $790 million and net profits of $6.6 million for the year that ended June 28, 1987, Tops was again taken private. Management hired New York investment banker Goldman Sachs, which then found a buyer: the Los Angeles-based merchant banking firm of Riordan, Freeman & Spogli, which paid about $280 million, including debt, for the company. RFS already owned other supermarket concerns, including Bayless Southwest Cocompany in Phoenix, P&C Foods in Syracuse, Boys Markets in Los Angeles, and Piggly Wiggly Southern in Vidalia, Georgia.
Ahold Parentage in 1991
Tops would be owned by RFS for less than four years. During this transitional phase, Larry Castellani was named president of the company. Tops continued its expansion efforts, although the balance did not reflect its overall health. The company lost $13.3 million in 1988, $12.1 million in 1989, and $2.8 million in 1990, but according to management these results were essentially "paper losses" connected to the 1987 buyout. Annual revenues reached $812 million by this point. Moreover, the chain experienced a significant increase in operating income, and cash flow improved by 50 percent. An objective reflection of the company's state was provided in 1991 when the Dutch conglomerate Ahold N.V., through its U.S. subsidiary, Ahold USA, decided to buy the chain. Ahold, which generated more than $10 billion in annual revenues, split equally between the United States and the Netherlands, was interested only in acquiring quality properties. According to a statement issued by Ahold USA president Rob Zwartendijk, "Top Markets represents a remarkably good fit with Ahold's existing U.S. operations in terms of its retailing formats, market approach and geographic location." The acquisition also elevated Ahold to the status of a top ten food retailer in the Unites States. According to a Tops management statement, becoming a part of the Ahold family was also a positive development for the supermarket chains: "Backed by the extensive financial and technical resources of a highly successful international retailing group, Tops Markets is about to enter a bright new growth phase in its development." With the financial backing of its new corporate parent, Tops hoped to accelerate the conversion of existing stores to the superstore format and open new units, as well as to extend its geographic reach.
Over the course of the 1990s, with Larry Castellani now serving as CEO, Tops expanded into central New York state and Northeast Ohio. In 1994, it opened a new headquarters in Williamsville, New York, then in 1996 opened a major state-of-the-art distribution center in western New York. Tops also launched a number of marketing initiatives. Allying itself with M&T Bank, the company co-branded a popular Visa credit card that offered stores credits. Tops also opened Fantastic ticket outlets in some of its stores to sell tickets for the Buffalo Bisons minor league baseball team and Buffalo Sabres National Hockey League team, as well as to events held at the venues where the teams played. Tops added significantly to its portfolio in 1996 when Ahold merged its Ohio-based Finast supermarket chain into the operation, adding 43 stores, mainly located in northeast Ohio. Although they adopted the Tops colors and added the Friendly Markets tag, the supermarkets retained the Finast name until 1999, when all the northeastern Ohio stores were rechristened Tops Friendly Markets. In another development in 1996, Ahold announced that it was going to use the Tops banner on supermarkets it planned to open in Thailand as part of a joint venture with Bangkok-based Central Group. For the parent corporation, this alliance was part of a larger effort to expand its supermarket operations into Malaysia, Indonesia, and Singapore.
In October 1997, Larry Castellani resigned as Tops president and CEO in order to take a corporate position with Ahold. Stop & Shop's CEO, Bob Tobin, filled in on a temporary basis. In January 1998, a replacement was named, 39-year-old Steve Odland, who took over as president and CEO of Tops in February, despite having no retail experience other than working at the store level while attending college. After earning an undergraduate degree in business administration from the University
- Glynn, Matt, "Departure of Tops Markets' CEO Aids Ahold Image, Analysts Say," Buffalo News, June 26, 2003, p. 1.
- Hagerty, Bob, "Dutch Concern Agrees to Buy Tops Markets," Wall Street Journal, February 28, 1991, p. A4.
- Hyland, Bruce, "Tops Markets Plans Return to Public Status," Business First-Buffalo, February 10, 1986, p. 1.
- Janoff, Barry, "Thinking Smaller," Progressive Grocer, December 1999, p. 57.
- Zwiebach, Elliot, "Tops Execs in LBO Bid for Chain's 145 Stores," Supermarket News, June 15, 1987, p. 1.
Source: International Directory of Company Histories, Vol.60. St. James Press, 2004.