Two Ralphs and a Food 4 Less will close by May in Los Angeles, a decision the parent company says was accelerated by a city mandate requiring workers earn an extra $5 hourly in “hazard pay” during the COVID-19 pandemic.
Cincinnati-based Kroger said it’s shuttering the underperforming stores — Ralphs at 9616 W. Pico Blvd. and 3300 W. Slauson Ave. and a Food 4 Less at 5420 W. Sunset Blvd. The stores will close May 15, affecting 289 employees.
Ralphs spokesman John Votava said the companies hope to move as many displaced workers as possible to neighboring Ralphs and Food 4 Less locations.
“We operate seven Ralphs and Food 4 Less stores within a 4-mile radius,” he said. “We’ll still operate 65 stores in Los Angeles after these closures.”
Additional closures in Long Beach
Kroger recently announced plans to shutter a Food 4 Less and Ralphs in Long Beach in the face of a similar pay hike that requires large grocery stores in the city to pay workers an extra $4 an hour in hazard pay.
Those stores are scheduled to close April 17.
The average grocery store worker in Los Angeles makes $17.51 an hour, according to a report by Los Angeles’s chief legislative analyst, which cited ZipRecruiter. Kroger said Wednesday that the average L.A. Ralphs and Food4Less employee rate is $18 an hour.
‘Razor-thin’ profit margins
In a statement Wednesday, Kroger said its stores operate on razor-thin profit margins. Hazard pay, the company said, makes it “financially unsustainable” to keep the three L.A. supermarkets open.
“It’s never our desire to close a store, but when you factor in the increased costs of operating during COVID-19, consistent financial losses at these locations and an extra pay mandate that will cost nearly $20 million over the next 120 days, it becomes impossible to operate these three stores,” Kroger said.
The Los Angeles City Council voted 14-1 in late February to approve the $5 hourly pay hike, which will last for 120 days. It applies to non-managerial employees at grocery or drug stores that employ more than 300 workers nationwide, or more than 10 employees on-site. It also includes big-box stores like Walmart and Target that dedicate at least 10% of their sales floor to groceries or drug retail.
Profits have not trickled down
L.A. Councilwoman President Nury Martinez, who introduced the city’s wage-hike motion with Councilman Mitch O’Farrell, said the pay increase is merited for cashiers, stockers, baggers and others who have risked their lives during the pandemic.
“While these companies have seen massive profits, it has not trickled down to their employees,” she said during the council’s discussion of the ordinance on Feb. 24. “These companies can afford to pay the hazard pay, they just don’t want to.”
Stuart Waldman, president of the Valley Industry & Commerce Association, wasn’t surprised to learn of the pending store closures.
“It is frustrating that the city council has ignored the chief legislative analyst, who warned that the only positive result of ‘hazard pay’ will be higher wages, in exchange for increases in labor costs, higher grocery bills for consumers, pressure on struggling stores, reduced hours and layoffs,” he said. “This was the wrong decision.”
Grocery workers have been on the front lines of the crisis ensuring that people have access to safe and reliable food supplies, he said, and grocers have undertaken “massive efforts” and spent millions to keep workers and customers safe.
“I hope the council considers the long-term economic impacts of this decision,” Waldman said.
Massive profit increases
Profits soared an average of 39% in the first half of 2020 year at supermarket chains and other food retailers, according to a report from the Washington, D.C.-based Brookings Institution, but front-line grocery workers reaped little or no benefit.
Kroger profits during that period were up 90%, Brookings said.
The California Grocers Association filed federal lawsuits against Long Beach, West Hollywood and Montebello, seeking to declare hazard pay mandated by those cities as invalid and unconstitutional, arguing that grocers will not be able to absorb the additional pay without raising prices, closing stores, reducing hours or laying off employees.
A federal judge denied the association’s bid to temporarily overturn the Long Beach ordinance.
City News Service contributed to this report.
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