The roots of Dominick's reach back to 1909 when Sicilian-born Dominick di Matteo immigrated to America, settling in Chicago. In 1918, he established a small deli, squeezed into a 20-by-50 foot location on Chicago's west side. In that same year, Dominick di Matteo, Jr. was born. As soon as he was old enough, the young Di Matteo began helping out with the business. He was only 16 years old when he took over the management of a second store, launched in 1934. It was a time of transition in the grocery business, which was making the switch from orders being filled by clerks to self-service, a concept pioneered by Clarence Saunders and his Piggly Wiggly stores. Next came the supermarket concept that flourished in the years following World War II. In 1950, the Di Matteos opened their first supermarket. The facility was 14,000 square feet in size and inaugurated the rise of a major Chicago-area chain of large-format stores. It was also one of the first of the new supermarkets to introduce in-store delicatessens and a frozen foods section.
|Dominick DiMatteo Sr., center, stands with family members and customers in 1935 in his first store, at 3832 West Ohio St. He gave it his first name to make it 'homey.' — Chicago Tribune|
In 1950, the DiMatteos opened their first supermarket, a 14,000-square-foot store.
By 1968, Dominick's chain totaled 19 stores, at which point the Di Matteos elected to sell the business to Fisher Foods Inc., a Cleveland company run by John and Carl Fazio, who in a short period of time had transformed a six-store chain into a 74-store operation.
|Night stockman Alex Miladinovich loads sales items into a basket in Dominick's Finer Foods at 6009 North Broadway on June 15, 1972. — Chicago Tribune, Oct. 10, 2013|
The Di Matteo family continued to run the Chicago stores, and although Fisher Foods had the financial resources to grow the chain to 71 units, the Di Matteos was not happy with the arrangement. In 1981, the family bought back the chain for $100 million, the same year that Dominick di Matteo, Sr. died.
|Check-out counters at Dominick's Finer Foods at 115th and Western Avenue. —|
Chicago Tribune, April 17, 1975
Dominick's continued to expand during the early 1980s through new store openings, the remodeling of older units, and the acquisition of Kohl and Eagle stores. As a result, it made serious inroads on the market share of Chicago's leading supermarket chain, Jewel, whose own growth had been curtailed since it had been acquired in 1984 by Salt-Lake City-based American Stores Co., now undergoing internal problems. At the time, Jewel had a 35 percent share of Chicago's $6 billion market, while Dominick's controlled just 13 percent, according to Supermarket News. Two years later, however, Jewel saw its share slip to 34 percent while Dominick's had improved to 22 percent, prompting some observers to speculate that within five years Dominick's might actually pass Jewel in market share. Also impressive was the fact that with only half as many stores as Jewel, 88 compared to 175, Dominick's was able to achieve two-thirds of its competitors' market share. Dominick's was especially successful in its remodeling program, which both improved the shopping experience and added selling space. It also introduced floral and cosmetic boutiques, as well as expanded deli and seafood sections. Jewel countered by offering similar features but lacked Dominick's flair.
In 1985, Dominick di Matteo, Jr. stepped down as chief executive officer, replaced by his son James, although as chairman he continued to hold sway over the business. While Dominick's remained the trendsetter among the Chicago supermarket chains during the rest of the decade, it did not close the gap on market share with Jewel, which was especially well established in city neighborhoods. Dominick's was primarily making its mark in the suburbs, which were now receptive to some of the chain's innovations, such as prepared foods. It even joined forces with Starbucks Coffee to install coffee bars in several of the suburban stores. In 1990, well before the Internet had become a major force, Dominick teamed with the Prodigy online service to provide a way for customers to order groceries from their personal computers. Moreover, it was well ahead of the curve when it began testing a shopping cart that included a computer screen, which not only displayed a store directory but also recipes and advertisements. On the other end of the grocery business, Dominick's took steps to counter the rise of warehouse stores, in 1987 introducing Omni Superstores, massive stores (more than 85,000 square feet) that sold both food and non-food items 24 hours a day.
In 1993, Dominick di Matteo died, leading to speculation that his heirs would soon sell the business. Although James di Matteo vowed to keep running the family-owned operation, the local press reported that he and his four sisters did not appear to share their father's passion for the supermarket business. At the time of James di Matteo's death, Dominick's, with an estimated 26 percent share of the Chicago market, operated 86 Dominick's stores and 16 Omni Superstores, altogether generating around $2 billion in annual sales. Although there was no shortage of suitors, more than a year passed before the family did indeed decide to sell the business. As Goldman Sachs & Co shopped the company, prospective buyers included Kohlberg Kravis Roberts & Co., Kroger Co., Albertson's Inc., Super Valu Inc., as well as European supermarket heavyweights Sainsbury Plc of Great Britain and Koninklijke Ahold N.V. of the Netherlands. In the end, the Di Matteo family sold the chain to an investment partnership headed by Yucaipa Co., a rapidly growing Los Angeles-based supermarket holding company. The purchase price was $692.9 million, of which $420.9 million bought the stock, which was mostly held by the Di Matteo family, and $272 million covered debt. Also involved in the deal was the New York investment firm Apollo Advisors L.P. For Yucaipa and its head, Ronald W. Burkle, it was a crafty deal. The firm put up only $20 million of the funds and immediately received $14 in handling fees, as well as arranging to be on the receiving end of an annual management fee of 2 percent of cash flow. The Di Matteo family as well as senior management also retained a small stake in the business.
Dominick's closed on December 28, 2013.
1918: Dominick di Matteo opens his first store.
1934: A second store is opened.
1950: The company's first supermarket opens.
1968: The Dominick's chain is sold to Fisher Foods Inc.
1981: The Di Matteo family reacquires the chain.
1995: Yucaipa Cos. buys the company.
1998: Safeway Inc. acquires the chain.
Compiled by Dr. Neil Gale, Ph.D.