BOSTON -- J. Bildner & Sons, the 'yuppie' specialty grocery chain that has filed for bankruptcy, followed a sound concept, but expanded too fast with too much borrowed money, experts said Wednesday.
Headed by 34-year-old Jim Bildner, the Boston-based chain enjoyed sparkling initial success and within four years had expanded from the Northeast into the South and Midwest.
But it got into financial trouble and filed for Chapter 11 bankruptcy protection Tuesday, at least $40 million in the hole.
'I did not want this day to happen, but it is happening,' said Bildner, who was featured in a 1984 Newsweek article on lifestyles and successes of young urban professionals, or yuppies.
A third-generation grocer, Bildner, 34, was dubbed the 'yuppie grocer,' and saw an opportunity to make it big in an industry that historically rewards those who bascially stick to local markets and expand very slowly.
He announced plans two years ago to expand to 50 stores nationwide by the end of this year, and to 75 at the end of 1989. The company went public two years ago offering, 1.8 million shares at $13 per share. It closed trading Wednesday at 25 cents, down 50 cents.
Bildner did well in some locations, like Boston's Back Bay neighborhood, where people generally walk and do not have a wide choice of stores when it comes to food shopping.
In other cities, like New York, Bildner faced pickets from unions because he did not employ union workers, and also had to contend with stiff competition from entrenched establishments.
And in the suburbs, Bildner's had to compete with people willing to drive almost anywhere, and supermarkets making an effort to sell pre-cooked foods, a Bildner staple.
After expanding to 19 stores in Massachusetts, Georgia, Illinois, New York, Boston and Alabama, Bildner had only seven left with 500 employees when he filed for bankruptcy. The company owed an estimated $40 million to about 1,000 creditors.
Some experts viewed the rapid rise and decline of the chain as a result of Bildner's boldness in building it up -- a confidence that convinced investors and led to heavy debts.
David J. Ferrari, president of Argus Management, a firm specializing in helping financially troubled companies said the ratio of debt and assets to the company was 'unusually high' and expressed surprise the company was able to borrow as much as it did.
'There is a market, but you expand deliberately and carefully because every market is different and there is not a format that you apply,' said Kenneth Partch, editor of Supermarket Business, a trade publication.
One analyst who preferred to remain anonymous said the smaller grocers are very competitive because they get to know their customers.
Bildner said he is hoping his creditors will agree to a plan to allow his seven remaining stores to continue operating rather than insist on liquidation of the company.
Bildner, who earned a $117,000 base-pay salary in 1986, said he has put his Manchester-by-the-Sea mansion on the market for $2.2 million and has taken a 'fairly dramatic pay cut' this year.
'I believe in the company, and all the people working for the company,' said Bildner. 'I feel a tremendous responsibility to help them make this company survive.'