Rainbow Foods ceased operations primarily because its parent company, Fleming Companies, strategically decided to exit the grocery business entirely in 2003.
Fleming Companies' Strategic Divestment
In 2003, Fleming Companies made a definitive decision to withdraw from the grocery chain business, leading to the effective closure and divestment of Rainbow Foods. This strategic move involved a two-pronged approach to dismantle their ownership of the chain:
- Lease Sales: Fleming Companies sold the leases for 31 of the Rainbow Foods stores to Milwaukee-based Roundy's for a sum of $82.5 million. This transaction allowed Fleming to divest a significant portion of its assets related to the chain.
- Store Closures: Concurrently, Fleming chose to close the remaining 12 locations that it still owned. This action marked a complete withdrawal from direct involvement and ownership of the Rainbow Foods brand.
Breakdown of the Transition
To illustrate Fleming Companies' exit strategy from the Rainbow Foods chain, consider the following breakdown of store dispositions:
| Disposition Method | Number of Locations | Recipient/Outcome |
|---|---|---|
| Leases Sold | 31 | Roundy's |
| Locations Closed | 12 | Permanent Closure |
| Total Impact | 43 | Complete Exit |
This comprehensive strategy ensured that Fleming Companies pulled out of the chain all together, which ultimately led to Rainbow Foods going out of business under its original ownership and operational structure.
