Out of Date Food for Impoverished Americans

(New Holland) Robert Pavelick Sr. doesn’t have any wiggle room. This retired machinist must get by on his pension of $960 a month.

In spite of everything, the 72-year old American has reason to believe luck is on his side.. His insurance pays for the 15 medications he has to take since his cardiac defibrillator was replaced. And he can shop at Amelia’s, a supermarket that’s not far from his home in New Holland, a small town in the heart of the Amish country, about 100 kilometers East of Philadelphia in Pennsylvania.

“The prices are cheaper,” he puffs confidently, slowly pushing a cart full of Stouffer’s frozen dinners sold at two for $3.

At Amelia’s Grocery Outlet, the prices beat the competition, even Wal-Mart’s! Thus the “Wow Pricing” isn’t a slogan that rings false.

Whilst in the store I bought a big bottle of Gatorade (69 cents), a big V-8 (50 cents), a small Tropicana juice (17 cents), a back of cut carrots ($1.50), a 212 gram box of roasted Planters almonds ($2.49), a half-packet of Fig Newton cookies ($0.79), six boxes of Sun-Maid dried raisins and a wide bag of crusty vegetables ($2.50). Grand total : $10.38, with tax!

“ A middle-class family of four spends $900 a month on groceries. Our stores allow them to cut that bill in half. And to have $400 more each month in their pockets, is not nothing,” Michael Mitchell, Amelia Grocery Outlet’s president said.

Amelia’s secret? This small chain of 11 supermarkets sells expired products, discontinued products or products with small imperfections. For example, it sells chicken breasts from Wendys that have been rejected by the fast-food chain for their shape or irregular weight.

As food prices explode, Amelia’s supermarkets booms.

The chain’s figures rose to 29.4 million dollars last year. It was only 19.7 million in 2004. This is a 49% jump in value for this family-run business that employs more than 300 full-time employees. The magazine Inc. recently honored Amelia’s as the private business to have exhibited the most growth.

Or, this growth is accelerating as Americans now have to tighten their belts. “We see more and more people fromthe middle-class shopping in our stores, which tells a lot about our economy,” notes Michael Mitchell.

This businessman predicts that Amerlia’s revenues will reach 36 million dollars in 2008. Since the start of the year, sales from comparable stores (those open for at least a year), the chains’ reference point, leapt 15%. In comparison, the chain Costco saw sales of its similar supermarket-warehouse rise 6% in the United States in the course of a fiscal year that ended on August 31st.

Note that it is impossible to verify Amelia’s results independently since it concerns a corporation with closed capital.

The Food Champions

It was Mike Mitchell’s father who launched Amelia’s in 1989. Melvin Mitchell ran a frozen chicken company which he sold Tyson Foods. The giant Tyson didn’t want to embarrass itself with two irregularly-shaped chicken breasts sold by the producer. Thinking he was too young to retire, Melvin Mitchell bought them back. Thus Amelia’s was born, named after the great grandmother of Michael Mitchell.

If Amelia’s knows success now, that’s because the store has won the agrobusiness giants’ trust over the years: Kraft, General Mills, Heinz, Nabisco, Kellogg’s, Dannon. In the large alleys within this supermarket in New Holland, their large signs are more visible than the obscure brands.

“The big manufacturers don’t want to sell their products to just anyone,” Michael Mitchell explains. “They prefer to give their products to food banks or to destroy it rather than sell it to the retailers that could make them look bad or harm their brands.”

Amelia’s is said to bring a maniacal care to the cleanliness of its supermarkets and to the conservation of its foods that are delivered to its warehouses near or past their expiration dates. In this warehouse of 70,000 square feet that goes to the New Holland town limits, there are two refrigerated sections from 17° C to 23° C, the motors of truck elevators are purring between the high rows of shelves. Some teams hustle day and night to unload trucks in preparing orders for stores throughout Southeastern Pennsylvania.

Turning Over Inventory

For this businessman, 46, who has made a career at Heinz and General Mills before leading the direction of the family business, the success of Amelia’s lies in its rapidity to consistently push out an inventory that changes from week to week.

The more products that approach and pass their date, the more get sold. On the day we visited, October 1st, customers could buy two four-packs of yogurt to drink DanActive for the price of $1. The catch: they expired on September 27th.

In order to sell the merchandise, however, Amelia’s abstains from publicity where it would announce its sales, like Heinz ketchup bottles and Duncan Hines cake mix sold at 99 cents. Some of Amelia’s supplies prevent them from doing so, since they don’t want to turn their backs on their other clients. In any event, the chain store doesn’t want to upset their agreement. “Our strategy consists of acting under the radar,” Michael Mitchell says.

But Amelia’s does engage in generic publicity. “We’re preparing a basket of goods and comparing the prices of the same pieces from Wal-Mart, Giant or Weis (a regional chain). Our prices are 45 to 55% less expensive.”

Michael Mitchell knows that some Americans scoff at their business. But in this country of generous portions, where food consumption is frequent, this businessman believes that a retail store like Amelia’s plays an important role.

“We sell food that could be lost. We allow manufacturers to increase their revenue and lower their prices. We help our clients save. In short, everyone wins.”