Just weeks after facing what looked like certain death, San Jose's financially strapped but extremely popular Hispanic grocery chain Mi Pueblo has a new lease on life.
The family-grown grocer announced Wednesday that it was emerging from Chapter 11 reorganization. Along with a $56 million injection of financing from Chicago-based Victory Park Capital, the popular chain will bring on new leadership. Grocery veteran Javier Ramirez takes over as president and CEO from chain founder Juvenal Chavez, who will become chairman.
"We have been a part of our communities since 1991," Ramirez said in a statement, thanking Mi Pueblo's vendors and customers for hanging in with the chain since it sought protection from creditors nearly a year ago. "We can say that today marks the beginning of a bright, new chapter for Mi Pueblo."
With more than a dozen stores in the Bay Area, along with three on the Central Coast and three more in the Central Valley, a restructured Mi Pueblo still faces an uncertain future in an intensely competitive landscape. The supermarket industry has been going through extreme flux in recent years, with smaller, family-run chains having to battle behemoths like Target and Walmart for shoppers keenly focused on finding the cheapest groceries possible for their families.
Founded by Chavez in 1991, with its first store called Country Time Meats on Story Road in East San Jose, Mi Pueblo in 2012 had annual sales above $350 million, according to court records filed during the bankruptcy proceedings. But in the first six months of 2013, sales grew only 0.6 percent while the chain grappled with workforce and immigration issues that resulted in the firing of 80 percent of its staff.
In his statement, Ramirez seemed to acknowledge the challenges to come, saying "the road ahead will not be easy and we know that there is much work to be done, but we have already started to implement aggressive initiatives designed to reposition Mi Pueblo as a profitable entity.''
Mi Pueblo, which kept its doors open after filing for Chapter 11 in mid-2013, said it plans to use the cash infusion from Victory Park to push even deeper into the Hispanic market, beefing up customer service inside the stores while offering competitively priced Mexican food products usually found only south of the border.
Industry analyst David Livingston, who just recently told this newspaper "if I was a lender, I would be leery about loaning money to the same people who made the decisions that got them into so much debt," was taking a wait-and-see attitude.
"They're going to have to make a lot of changes, especially on the expense side, and how it turns out, I don't know,'' he said. "While operationally they managed good supermarkets, something happened on the balance-sheet side where things went awry.
"They might have a chance to recover, especially with a white knight investing in the chain,'' Livingston said. "And while the investors might put some handcuffs on the management team, it's good that someone's willing to put in new leadership and capital.''
Contact Patrick May at 408-920-5689 or follow him at Twitter.com/patmaymerc.
Year founded: 1991
New investment: $56 million
Sources: Mi Pueblo; Mercury News reporting