Franchising operation already cost Delhaize half a billion

Belgian supermarket chain Delhaize is paying a high price for its plan to spin off its 128 stores. Last year, the retailer had to face up to losses of 400 million euros.

High costs

Delhaize’s turnover decreased by 1.8 % to 5.3 billion euros in 2023. Its operating result went down to minus 390 million, Belgian newspaper De Tijd derived from the retailer’s annual report. The figures illustrate the high costs associated with the major restructuring operation the supermarket chain carried out last year, but the loss of turnover due to strikes is only one piece of the story.

The whole operation has already cost Delhaize at least 476 million euros, the newspaper calculated. Part of that amount is due to the write-down of the affected branches, which Delhaize has sold to the independent acquirers below their actual value. In the second quarter of this year alone, the retailer therefore wrote down 122 million euros. Cutting 247 jobs at its headquarters is also costing the company money, while there also are other unspecified costs to add to the total.

Growing market share

Meanwhile, Delhaize does make great progress with its plan: at the beginning of this month, it had already transferred 108 of its 128 shops to independent operators. The transferred shops are recording very encouraging results, Ahold Delhaize CEO Frans Muller said. He says that market share is rising faster than expected and is already said to be higher than before the announcement of the ‘future plan’ in March last year. However, the company does not give concrete figures.

Delhaize is hoping that costs will drop down significantly in the franchise system. The entrepreneurship of affiliates should boost sales again, while another important factor is the fact that the majority of shops are now open on Sundays, a significant advantage over competitors Colruyt, Aldi, Lidl and the Carrefour hypermarkets.