Leuken's Bemidji grocery sells to employees after 46 years

Joe Lueken is selling out
Joe Lueken, pictured in front of his Village Foods store in Bemidji, is selling out to his employees after 46 years in the business.
Jon Heller for MPR

After 46 years in the grocery business, Joe Lueken is selling out. But the new owner will have a familiar face, about 400 of them, in fact.

Lueken, 70, who owns two stores here and one in Wahpeton, N.D., is retiring and turning them over to an employee stock ownership program, passing up interest from several other regional grocery chains.

Store managers say the stores could have fetched at least $30 million from outside owners. Instead, 400 employees will take over ownership on Sunday and pay Lueken out of store profits over the next five to seven years.

"What an awesome way to end the year for all of us 400 people, and then even for Bemidji," said Maria Svare, front-end manager at Lueken's Village Foods at the south end of Bemidji. "It's a good thing."

Svare has been an employee for two and half years. To participate in the ownership program an employee needs to be 21 years old and to have worked for at least a year. But there is no requirement to provide an investment up front.

The program creates a board of directors to oversee management of the stores. Employees will have input in business operations through committees.

There are some 11,000 employee stock ownership programs in the United States. Another regional grocer, St. Cloud-based Coburn's, was sold in 2006 to an employee stock ownership plan. Scheels sporting goods stores based in Fargo are another example.

New CEO Brent Sicard
New CEO Brent Sicard in the warehouse of Lueken's North.
Jon Heller for MPR

"I'm glad he chose this, compared to what he could have done," Svare said. "It's a great future to look forward to."

Svare worried that if Lueken had sold the stores to someone else, new management might have come in and fired or replaced existing workers. She said keeping the grocery stores locally owned instead of chain-owned means the profits will stay in the community.

Lueken is the son of a baker, known around Bemidji for his generosity, and a strong supporter of local charities and a booster of both Bemidji State University and the community.

Lueken's move to give his stores to his employees has gotten international media attention. He thinks it's because people crave positive stories.

"There's so much bad news in this country today, and especially the corporate greed that you see, people just want to have some good news," he said.

His employees are largely responsible for his success, and they deserve to be rewarded, he said.

"It feels good," he said. "When you can have employees come up to you with tears in their eyes. I'll tell you, there's no feeling like it in the world."

Ownership shares will be divided by seniority, but a lot of the finer details have yet to be worked out. The federally regulated program requires that an impartial administrator decide how shares in the store are valued.

Brooke Rebers, Operations Manager
Brooke Rebers, Operations Manager at the Leuken's North store.
Jon Heller for MPR

The reality of ownership hasn't sunk in yet with workers, said Matthew Sconce, director of the south end store. He pointed out that employees will soon be responsible for both the good and the bad. In Bemidji that means facing stiff competition from Target and Walmart, along with another locally owned grocery store.

"If you're an owner of any company there's a risk involved," Sconce said. "It's very competitive. It's very difficult to compete with the big box stores. What we look at doing is to provide incredible customer service."

Sconce says that means continuing to carry out groceries for customers. There's also talk of innovations, like creating an app so customers can shop using their smart phones.

Taking Lueken's place as president and chief executive officer will be Brent Sicard, who started out as an overnight janitor in 1998.

"You know, this is about legacy, and Joe has an amazing legacy," Sicard said. "We've said many times you don't ever replace Joe. There's one Joe Lueken in the world. But you recreate him in the aggregate of everyone around us. So he's trained us all, and our hope is that we can take everything that made him great. And we really use that as our culture, who we are."

The new owners will get their first look at financial statements after the first of the year, as they begin learning how to manage their business. Lueken said he and his wife, Janice, plan to travel the world and enjoy a long awaited retirement.