Safeway supermarkets switches to employee-owned structure
Safeway, an Indianapolis grocery chain for more than 75 years, is now entirely owned by its employees.
Scott Weaver, owner of SAW Capital, Safeway’s parent company, announced Thursday the creation of SAW Ventures Inc. as a new ESOP, or employee stock ownership plan, establishing a trust that will distribute yearly profit-related bonuses to more than 150 employees.
“I felt the time was right,” Weaver said of yielding ownership. “I wanted to figure out a way to reward my employees who helped me achieve my success.”
The companies of SAW Ventures include Grace Foods, the component that includes five Safeway stores; meat wholesaler Dugdale Foods; GS Transportation; text-alert service Casper SMS; and software provider P2P Solutions.
Leslie Exendine, previously COO for SAW Capital, will be president of SAW Ventures. Weaver will be chairman and CEO.
Employees will have an ESOP committee, Weaver said, and the committee chair will attend board meetings on behalf of the employees.
ESOPs are not all that common. According to the National Center for Employee Ownership, just 6,482 U.S. firms were ESOPs as of 2019, including 174 in Indiana.
Corporations that are 100% owned by an ESOP are eligible for significant tax advantages.
“The company becomes tax-exempt for all federal and state income taxes,” Weaver said. “The amount of additional value that falls to the bottom line each year can be considerable.”
In a provided statement, Exendine said the ownership structure benefits management and employees.
“Employee retention and motivation are challenges that are not going away for any business,” she said. “Providing ownership opportunities across a group of people is the best way to keep our team focused and engaged for the long term.”
The Indiana Center for Employee Ownership bills ESOPs as a “great succession solution.”
Scott Weaver, CEO of SAW Ventures.
“Most of the time when you sell your company to a strategic partner, three or four years from now no one’s there,” said Weaver, who has a venture capital background thanks to being a partner at Indianapolis-based AGS Capital LLC from 2002 to 2010. “I didn’t want that.”
Weaver, a Greenwood native who attended Ball State University, left AGS to buy Grocers Supply Co., a local wholesale distributor of grocery products. Safeway was a customer, and, in 2016, Weaver sold Grocers Supply to Winkler Wholesale Grocers in Dale to become a co-owner of Safeway.
Weaver said the majority of SAW Ventures employees work at the five Safeway locations: 2176 Shelby St.; 5602 N. Illinois St.; 3008 W. Kessler Blvd.; 2435 N. Sherman Dr.; and 5040 E. 16th St.
“I thought the best way to reward my management team and my employees,” Weaver said, “was to give them what everybody really thinks and dreams about, I think, in their lifetime: Wouldn’t it be great if I owned a company?”
Safeway, which has no affiliation with the large West Coast grocer with the same name, was founded in 1944 by Michael DeFabis Sr., who operated the stores with his three brothers (Phil, Julio, Ernest) for more than 40 years.
They opened their first store at Lafayette Road and Tibbs Avenue on the west side and grew the chain to more than 20 locations. It merged in the 1970s with another local grocer, to become Preston-Safeway, before reverting to Safeway under different ownership in the 1980s.
As seen in the Indianapolis Business Journal and written by Dave Lindquist.