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Berkshire Partners LLC, a Boston-based private equity firm, yesterday signed a definitive agreement to make an equity investment in Grocery Outlet, Inc., an extreme-value grocery retailer with over 135 stores in the western United States. Terms of the transaction were not disclosed.
Headquartered in Berkeley, Calif., Grocery Outlet is a third-generation, family-owned business founded in 1946 by Jim Read, which offers brand-name products at up to 60 percent below traditional retailers’ prices by purchasing discounted surplus inventory directly from over 2,500 grocery manufacturers. Co-CEOs MacGregor Read and Eric Lindberg lead the company, and local independent operators manage its stores.
“We believe Grocery Outlet has a unique operating model that offers customers tremendous values on brand names they trust in a friendly, high-quality shopping environment,” said Chris Hadley, managing director of Berkshire Partners. “Over the past few years, Grocery Outlet has successfully invested in broadening its product offering, improving its marketing efforts and opening new stores. We believe the company is very well positioned for future growth.”
Grocery Outlet chairman Peter Read expressed the opinion that the deal would “develop future opportunities for our company.”
Berkshire Partners has a strong track record of investing in value retailers. Prior transactions include National Vision, an operator of value-oriented vision centers; Party City, a retailer of party goods; and Savers, a retailer of secondhand merchandise.
Grocery Outlet operates over 135 locations in Arizona, California, Idaho, Nevada, Oregon and Washington.
Berkshire Partners has invested in mid-sized companies since the mid-1980s through seven investment funds with aggregate capital commitments of approximately $6.5 billion. It seeks transactions in which it can invest $50 million to $500 million of equity capital, and has developed specific industry experience in several areas, including retailing, consumer products, manufacturing, transportation, energy, business services and communications.