Kroger to Close 3 LA Grocery Stores After ‘Hazard Pay’ Mandate
Kroger said the mandate will add an additional $20 million in operating costs, causing it to pull the plug on underperforming stores
Two weeks after Los Angeles approved a “hazard pay” mandate for grocery workers, the owner of the Ralphs and Food 4 Less supermarket chains, The Kroger Company, announced today it’s closing three underperforming stores in May.
The stores set to close are a Ralphs at 9616 West Pico Boulevard near Century City; a Ralphs at 3300 West Slauson Avenue at the Crenshaw Plaza Center in South L.A.; and a Food 4 Less at 5420 West Sunset Boulevard in Hollywood near Little Armenia.
The decision comes after the city’s chief legislative analyst warned that some companies would close stores and lay off workers if the city council approved the emergency ordinance, which requires an additional $5 per hour for grocery workers for 120 days. The emergency ordinance applies to all on-site workers at grocery store companies with 300 or more total employees.
Kroger said the mandate will add an additional $20 million in operating costs for all of its L.A. locations over the next 120 days.
The company described the three stores as “long-struggling” and “underperforming” in its announcement to close them on May 15, and said the decision was “accelerated” by the new mandate that requires extra pay for grocery workers. Kroger also announced earlier in February it would close two supermarkets in Long Beach after the city council there approved a $4-hike in “hazard pay.”
The average hourly wage for Ralphs and Food 4 Less associates in L.A. is $18 per hour and total compensation is $24 an hour, according to Kroger.
“Unfortunately, the Los Angeles City Council disregarded their own Economic Impact Report by not considering that grocery stores — even in a pandemic — operate on razor-thin profit margins in a very competitive landscape,” Kroger Co. said in a statement. “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 three 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 it will continue to operate 65 locations in L.A. and pay associates the mandated extra pay.
Additionally, the California Grocers Association filed a lawsuit against the city of Long Beach for its measure, and Sharon Tso, the chief legislative analyst, also warned that L.A.’s motion could produce a court battle.