A weird situation in New England is getting weirder. Regional grocery store chain Market Basket, which operates 71 stores in Massachusetts, New Hampshire, and Maine, is finding itself at the center of a massive controversy, with employees, executives, customers, and even local lawmakers all getting involved. The core issue? The board ousted good-guy CEO Arthur Demoulas to replace him with perceived money-grubber Arthur Demoulas, and the resulting furor has led to strikes, boycotts, and empty shelves.
Confused yet? Don’t blame you. Here’s what’s going on.
Arthur T. Demoulas became the CEO of Market Basket in 2008. He developed a reputation as a leader who genuinely cared about the 25,000 employees who worked for the family-run business. Employees for the company — both in the stores and also in the back offices — reportedly found him very likable, and were loyal to him and to the company.
In 2013, Arthur T.’s cousin, Arthur S. Demoulas, gained control of the company’s board. After trying for months, Arthur S. was finally able completely to oust Arthur T. from his role this June. A few other top executives also got the boot and were replaced with external hires.
Arthur S., however, does not enjoy the positive reputation of his cousin. The company is known for worker-friendly policies like good health insurance and promotions from within but employees believe that the new leadership means an end to employee-friendly practices and the start of a laser focus on nickel-and-diming their way to the bottom line.
Now workers at every level have rebelled, and so has the public. As of Friday, workers have vowed not to restock until Arthur T. is reinstated. Store shelves are sitting around empty in most Market Basket locations while the feud continues.
Thousands of protestors have gathered for rallies and demonstrations at Market Basket stores over the past days, starting with an event at the company’s Tewksbury, MA headquarters. Eight senior employees who helped organize the rallies have been fired
17 Massachusetts lawmakers on Saturday signed a letter supporting the workers and urging consumers to boycott the chain. Massachusetts Attorney General (and gubernatorial candidate) Martha Coakley also put in her two cents to support the workers. Even the governor of New Hampshire has issued a statement asking Market Basket’s new leadership to address the issue.
So where did this all come from? As always, there’s more to the story: current events are just the culmination of well over forty years’ worth of Demoulas family animosity.
A local blogger from Gloucester, MA, has a whole two-part explainer up covering the entire family drama- and scandal-filled backstory back to 1916, when the first store opened. It’s quite a tale, involving epic, decades-long lawsuits, paid-off witnesses, and lots of people going to jail.
The whole saga is well worth a read, but the important points in the timeline leading to today are these:
- The original founder had two sons, Mike and George Demoulas. They inherited his business.
- Mike and George expanded and co-managed the chain through the 1950s and ’60s, until George died suddenly in 1971.
- During the 1970s and 1980s, Mike basically stole the company out from under George’s heirs one chunk at a time.
- In the 1990s, George’s family sued Mike’s family over the fraud. The ensuing lawsuits become sprawling chaos.
- George’s family eventually wins. Mike is found to have defrauded them to the tune of $500 million and they gain back 51% of the company.
Ousted-but-beloved Arthur T. is one of Mike Demoulas’s four children; new, reviled leader Arthur S. is one of George Demoulas’s four children. It’s not hard to see why there would be animosity between them, nor even particularly hard to see why Arthur S. and his family might feel they are owed more from the company than they have been getting.
But what’s become clear over the past few weeks is that pretty much everyone at every level underestimated the loyalty Market Basket employees have for Arthur T. Market Basket does not have a unionized workforce, and so the employees do not have protection to undertake a collective strike.
Arthur T. Demoulas issued a statement today urging the company to reinstate the employees who were fired, saying, “The success of Market Basket is the result of two things: a business model that works and the execution of it by a dedicated and impassioned team of associates. Their fierce loyalty to the company and its customers has always been deeply valued. In the final analysis, this is not about me. It is about the people who have proven their dedication over many years and should not have lost their jobs because of it. I urge that they be reinstated in the best interest of the company and our customers.”
This week, the protests have moved from the company’s head offices to the (empty) stores themselves. Employees are calling for rallies at all 71 store locations. Reports from local media find that consumers are vaguely supportive of the workers, but mostly just want to be able to buy groceries again.
It’s unusual at best for so many workers to rally in support of one top executive over another, particularly at the risk of their own jobs. Arthur T. might not get his job back, but the chain needs to find a way to make peace with its workforce before all its customers get too used to shopping with the competition.