D’Agostino Supermarkets Inc.

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D’Agostino Supermarkets Inc.

1385 Boston Post Road
Larchmont, New York 10538-3904
U.S.A.
(914) 833-4000
Fax: (914) 833-4060

Private Company
Founded: 1939
Employees: 2,000 (est.)
Sales: $220 million (1995 est.)
SICs: 5411 Grocery Stores; 5812 Eating Places

D’Agostino Supermarkets Inc. is a privately owned super-market chain in New York City and suburban Westchester County, New York. Most of the 26 units in 1996 were in Manhattan. Geared to the middle- to upper-class shopper, D’Agostino’s has long been well regarded for quality meat and fish and fresh produce.

D’Agostino’s to 1980

The founders of D’Agostino Supermarkets, Pasquale and Nicholas D’Agostino, were born in Italy and came to the United States in 1924 with their parents, settling in New York City, where they helped their father with his fruit and vegetable pushcart. Already in their teens, they received their American education on the streets rather than in school. In 1932 they opened a small dry goods and grocery store on Manhattan’s Upper East Side. Even in the depths of the Depression, this was a neighborhood able and willing to pay for quality goods.

In 1939 the D’Agostino brothers moved their store from Lexington Avenue and 83rd Street to Third Avenue and 77th Street, taking advantage of more space to add a meat operation and calling their store the Yorkville Food Market. Trained as a butcher, Nicholas D’Agostino went every morning to the city’s main meat market to find the best beef, veal, and lamb available, but he and his brother kept their prices competitive with those of their rivals. At a time when many shoppers had to visit one store for meat, another for milk, and yet another for produce, the D’Agostinos’ food mart was one of the first to put meat, dairy products, baked goods, dry goods, and produce under one roof.

Business boomed after World War II, and a second store was opened farther downtown, at 20th Street near the East River. The brothers shared all responsibilities, although Pasquale’s title was president and Nicholas held the title of vice-president. By 1960, the year Pasquale died, there were seven or eight D’Agostino stores, all of them on Manhattan’s East Side. Capitalizing on its reputation for quality meat, D’Agostino’s ran highly successful advertisements in the 1960s that declared, “Please don’t kiss the butcher.” Nicholas D’Agostino turned over day-to-day operations of the business in 1964 to his two sons, Stephen and Nicholas, Jr. Stephen was named president and chief executive officer in 1972.

D’Agostino’s spread to Manhattan’s West Side in the 1970s and issued extra-large, white plastic “D’Ag Bags” that publicized the store’s name. Fashion models were especially fond of them for their size, and they used the bags to carry extra shoes, clothes, and makeup, thereby giving the supermarket chain a cachet. The company’s singing commercial, with the theme line, “Mr. D’Agostino, Please Move Closer to Me,” reverberated on radio in this period.

D’Agostino’s in the 1980s

By the 1980s D’Agostino’s, still a private company with all of the stock owned by Nicholas and his two sons but now based in the Westchester County suburb of New Rochelle, was one of the most profitable in the metropolitan area. There were 17 stores in 1981, with annual sales totaling an estimated $70 million to $100 million. Fifteen were in Manhattan, one in Brooklyn, and one, known as Foodtown, in the suburban community of Cross River. Interviewed by the New York Times in 1981, Stephen D’Agostino said, “Our plan is to develop our present core as a primary goal, filling in on the island of Manhattan.” To squeeze the maximum selling space from its small outlets (averaging only 7,000 square feet), the company was building shelves nearly to the ceiling and installing triple-deck cases inside meat freezers. Stephen D’Agostino resigned as chief executive officer of the firm in 1982, yielding the post to his brother, although he remained as chairman until 1986.

Under the direction of Nicholas, Jr., D’Agostino’s expansion continued during the 1980s, albeit at a more conservative pace. The eighteenth store opened in Manhattan’s Chelsea neighborhood in 1982, the nineteenth opened in the Westchester County community of Bedford in 1986, and the twentieth, also in Westchester, opened in 1987. Like the city stores, the suburban ones were serving the upper end of the supermarket trade. The suburban stores were much larger, however, 20,000 to 30,000 square feet, allowing larger perishables sections and service counters. By the end of 1988 the chain had grown to 24 stores–20 in Manhattan–and an estimated $200 million in sales.

Special Features, 1986–1990

One of these new outlets was a prototype East Side specialty-oriented store called Fresh Market. Although decorated with the usual D’Agostino black, red, and green colors, little of the interior of the small (5,000-square-foot) unit resembled the chain’s customary stores. Fruits and vegetables were displayed in their original crates and cases, and there were few staple grocery items like canned goods and cereals. The back was reserved for a bakery and a butcher counter selling fresh chickens and homemade sausage. Nicholas D’Agostino was hopeful that Fresh Market would provide the type of services to which residents were accustomed formerly in delicatessens, which had all but disappeared from the city. “We don’t want to be all things to all people,” he told a Grain’s New York Business interviewer. “The middle-to-upper-income consumer is our customer.”

During this period D’Agostino’s also introduced President’s Choice, a new line of upscale private-label products. Unlike most private-label groceries, which sold at a discount, President’s Choice, distributed through a Canadian firm, Loblaw Cos., generally consisted of gourmet items not available at other grocery stores. The first heavily advertised President’s Choice product, its Decadent Chocolate Chip cookie, sold 4,500 cases in six weeks (albeit at an introductory discount), compared with 3,000 cases of the leading national brand for the entire year. D’Agostino’s also issued an in-store circular with features about various President’s Choice products and other private-label items.

For the nondecadent health-conscious and environmentally sensitive shopper, D’Agostino’s began offering a wide variety of new items. Among the perishable products introduced in a “Good For You, New York” weekly circular in 1990 were organic produce, deli selections low in fat and cholesterol, “light” selections from the dairy case, and preservative-free lasagna and carrot cake. There was also a chicken raised on a pesticide-free diet. All of these items were under the D’Agostino private label.

In 1986 D’Agostino’s introduced Tele-A-Dag, a telephone delivery service offering goods available through a rented ware-house in the Bronx. This warehouse had a meat, fish, produce, delicatessen, and dairy operation, and a full line of about 2,000 grocery items. The phone service attracted interest among the elderly, working people, and mothers with young children. (It was dropped in 1990, however, because of high costs and traffic and parking problems in New York City; one employee had to bring the order to the shopper’s door while a second one drove the truck around the block because of the scarcity of parking.) In 1991 D’Agostino’s became the first supermarket in the New York area to accept bank debit (ATM) cards for payments at its checkout counters. It had been taking credit cards since 1987.

D’Agostino’s also was counting on customer service to distinguish itself from its rivals. A comprehensive system was tabulating information on every employee to match personal background, needs, education, and ambition with the company’s requirements. Unlike other chains, it began hiring its own delivery people in 1986, rather than continuing to rely on an outside service, and it offered them benefits to motivate better service. Finding its employees’ skills to be subpar, in 1990 the company introduced a “Career in Focus” program, with two company-paid 13-week sessions of three-hour Friday afternoon classes, held at a neighborhood college.

D’Agostino in the 1990s

In 1992 D’Agostino’s opened its first pharmacy department in a store at Amsterdam Avenue and 59th Street in Manhattan, near Roosevelt Hospital. During the same year all of its 26 stores introduced frozen organic produce, wrapped in polybags, for the organic produce sections it introduced in 1991. The line of goods included blueberries, raspberries, strawberries, peas, green beans, corn, and a mixed-vegetable item called Gardener’s Blend.

In addition to customers preoccupied with healthy eating, D’Agostino’s was targeting Manhattan’s large Hispanic population in the 1990s. “About a year ago we introduced a Spanish produce section in stores where we knew there was a Hispanic community,” the company’s public-relations director told Supermarket News in 1993. “We then rolled it out to some other stores and found there was a marketplace for Hispanic produce no matter where the store was located…. We think this is because in New York City people are just interested in the cuisine of a lot of different areas.”

Private labels were still working for D’Agostino’s in the early 1990s, when they were said to constitute between 15 to 20 percent of sales. In 1993 the company was selling more than 200 President’s Choice products and 15 premium perishable products under its own name, including juices as well as chicken. D’Agostino’s had most recently added an ice cream under its own name that competed directly with Haagen-Dazs but sold for around 30 cents less per quart. In addition it was maintaining its long-standing Foodtown line of value products.

D’Agostino’s got into the coffee-bar business in 1996 by opening its first two D’Ag Coffee Works in Manhattan, one in a Greenwich Village store, the other next to the store at Ninth Avenue and 57th Street. The latter was the prototype, offering several rare estate-grown coffees along with prepackaged sandwiches, salads, and sushi as well as tea. “Our research tells us the coffee-bar market in New York is only one-third saturated,” said Walter D’Agostino, vice-president for merchandising.

In 1996 D’Agostino’s had 26 stores and annual sales estimated at between $200 million and $220 million. These stores ranged in size from 4,000 to 30,000 square feet. Company headquarters were moved in 1993 from New Rochelle to nearby Larchmont, where Greenwich Associates, a real estate company owned by the D’Agostino family, purchased a 16,000-square-foot building, leasing much of it to D’Agostino’s.