Canadian grocer can't sell stores lacking union label

Buy the store and get the union free. It's a deal many aspiring grocers don't want as they pick up unwanted pieces of the big Dominion Stores chain in Canada. Conrad and Monty Black were dealt a blow earlier this month by the Ontario Labour Relations Board in their bid to sell off chunks of their grocery business. The Dominion chain was acquired by the Blacks when they took over Argus Corporation six years ago. At the time Dominion was the largest food retailer in Canada.

The Blacks first sold a block of stores in Quebec and then began selling stores one at a time as franchises called Mr. Grocer. In the past two years Dominion has shed 100 stores. There are 36 Mr. Grocer franchises in Ontario. The move leaves Dominion with the best stores in the best locations, as well as with a more profitable distribution system.

But the labor board ruled that Mr. Grocer franchises are bound by the union contract Dominion had with the Retail, Wholesale, and Department Store Union.

High wages have been one reason the smaller Dominion stores weren't profitable. Dominion's labor costs are 12 percent of sales, while Mr. Grocer is at 8 percent. The union fought a 50 percent cut in its pay and so far appears to have won. Wage rates for a meatcutter dropped from $11.49 to $5.75 an hour when one Dominion store switched to Mr. Grocer and went nonunion.

Some of the Mr. Grocer stores are unionized and others pay rates that almost equal the union wage. In most instances, though, lower wages and no union are what makes buying the franchises attractive. Now the independent owners of the Mr. Grocer franchises face having to pay those same wages. Dominion Stores is expected to go to a higher court to fight the ruling.