Schmidt, a longtime employee who began his career as a grocery bagger and now serves as Market Basket’s operations manager, was among the top executives laid off. for their loyalty to Demoulas, but were reinstated when he returned as CEO.
Schmidt risked his life for his mentor—and for a company culture that was focused on low prices and generous benefits. One day, he thought, he would tell his children that their father had stood up for what was right.
Today, a decade later, these debts have been almost completely paid off. A satisfaction for Schmidt and the thousands of colleagues who believed that it was worth fighting for the unique culture of a company.
All the management experts – the professors and consultants at business schools – were skeptical at the time that Market Basket would ever be the same again. Sure, it was a great story. Made for a great advertising message. Perfect for a Hollywood movie. Maybe Tom Hanks could play Arthur T. as a modern-day George Bailey. But what happens to a supermarket chain that promises “More for your money” philosophy when the company suddenly has to pay off a mountain of debt of $1.6 billion?
Sorry, skeptics. Demoulas and his 35,000 employees have proven you wrong.
According to Schmidt’s balance sheet, Market Basket only has $150 million in debt left. Schmidt said it would be paid off within four months. The chain has never abandoned its core strategy of low prices – if you don’t believe it, shop and compare today – nor its year-end bonus system or its profit-sharing pension plan.
And the empire of Demoulas Super Markets, as the company is officially called, now extends across four New England states. Sales are expected to reach $7.6 billion this year, roughly double what they were in 2014. The company has 20 more branches than it did ten years ago, 90 in total, and employs around 40 percent more people. The company has belatedly turned to the Internet, launching an official corporate website in 2017. Dunnhumby, a British marketing company specializing in the retail sector, ranks Market Basket among the five best-run supermarket chains in the United States.
Now 69, Demoulas continues to work overtime as CEO to keep the business running; the company is still owned by his sisters.
So much for the skeptics. Ten years ago, the Market Basket saga seemed destined to become one of the most famous case studies in modern business. The company’s success practically sealed that.
Given the animosity between the two sides of the Demoulas family, Market Basket’s story could have turned out very differently.
Again, for those who don’t know, a branch of the Demoulas family, led by his cousin Arthur S. Demoulas, has long owned a slim majority of the company, 50.5 percent. This was thanks to a 1990s court ruling issued during one of the many disputes between the two sides over the years. Despite this majority stake, Arthur T. had become CEO because a board member from Arthur S.’s side preferred to vote with him. In 2013, she switched positions, sparking a bitter battle for control.
Arthur S. Demoulas accused his cousin of making personal dealings in real estate transactions with a company controlled by two brothers-in-law. Arthur T., in turn, said his cousin simply wanted to take money out of the company at the expense of employees and customers. In June 2014, Arthur S. finally got his wish: Arthur T. was fired and replaced by two traditional executive co-CEOs.
No one, probably not even Demoulas himself, could have predicted the backlash. Employees went on strike en masse and staged huge protests, adopting a giant stuffed giraffe as their mascot as a reminder that sometimes you have to put your neck on the line when important things are at stake.
Customers also shied away, heading instead to Stop & Shop, Shaw’s, Wegmans and similar stores. Many returned to their favorite store, Market Basket, during the strike – and taped receipts to the windows to express their displeasure to Market Basket’s board of directors. Families held up “Save Market Basket” signs and waved American flags at the curb. Some suppliers even refused to deliver, and many shelves were empty.
And all because of a supermarket? Believe it or not, yes. The long-running dispute had evolved from a family feud into what many saw as a public campaign against corporate greed.
As Arthur S. Demoulas desperately sought a buyer for the chain, the situation became so dire that the company seriously considered filing for bankruptcy and closing all but 10 stores. Politicians, including then-governors Deval Patrick of Massachusetts and Maggie Hassan of New Hampshire, became personally involved to avert such a dire scenario.
Eventually, Arthur T. Demoulas scraped together $1.6 billion in loans to buy out his cousin’s family and restore order after nearly two months of chaos. All eyes were on him that fateful morning of August 28, 2014, after he closed the deal and delivered perhaps the most memorable speech of his life.
Schmidt still gets goosebumps when he thinks back to that day. And he still hears from customers who tell him that they stood with Market Basket employees in 2014.
So what can we learn now, looking back 10 years? The events add up to a fairytale ending worthy of a Frank Capra film, almost too good to be true.
But Schmidt’s telling of the story underscores the fact that if you are good to other people, they will be good to you. If people see that you are committed to a cause, they will support you. Important lessons for business and for life.
Meanwhile, Schmidt’s two teenagers are following in their father’s footsteps. They work customer-facing jobs at a Market Basket store in Nashua, learning the kind of lessons about responsibility and courtesy that teenagers learn in almost any job. Thanks to their father, they’ve learned another lesson: the importance of standing up for what you believe in, even when the odds are against you.
Jon Chesto can be reached at [email protected]. Follow him @jonchesto.
