Growth is the focus of employee-owned Buehler’s


E&H Family Group, the company that owned the Buehler’s chain of supermarkets, started considering the sale of its grocery assets at the beginning of 2016 — though few were aware a deal was being considered.

The impetus for the sale, in large part, was the current generation of Buehler family owners were reaching retirement age.

Dan Shanahan helped in the selling effort as the team put together the confidential information memorandum and generated a list of possible acquirers. The feedback in the market was positive.

“There was a lot of interest because Buehler’s is a very well-respected chain to people in the industry,” Shanahan says.

The company, however, ultimately balked at selling to an outside buyer because it became clear that many of the suitors would not have needed Buehler’s headquarters, where more than 100 people are employed, and there might’ve been some overlap that would have led to some stores shutting down.

“For the Buehlers, all things being equal, it was important that they were able to retain the jobs,” Shanahan says.

So rather than go with another grocery chain, the company decided to sell to its employees.

According to the press release sent out in October 2017, E&H Family Group sold its 13 supermarkets to employees in the form of an employee stock ownership program. Shanahan, who joined Buehler’s as its president and COO in 2011, became the president and CEO of the newly formed company, Buehler’s Fresh Foods, which is responsible for operating the grocery chain.

The deal included the Buehler’s headquarters, its commissary and warehouse — essentially all of the assets that support the grocery business.

“All 2,100 employees will be retained in the transition and eligible employees will become owners,” the company said in a statement.

A large tent

The idea of selling to employees as an ESOP was, at least in part, a way to formalize the bottom-up management philosophy that existed through groups such as the company’s associate’s council. This is a representation of clerks who meet with management to discuss issues, good and bad, that they see from their positions.

“It wasn’t a big shock to the people here because we always want them to act like an owner, and this just formalizes it,” Shanahan says. “What’s happening in our industry today in Ohio, there’s low unemployment and it’s a big benefit for us on an attraction or retention basis, too.”

In Buehler’s ESOP, he says nearly every employee is eligible from day one for ownership, but their vesting doesn’t start unless a person works at least 20 hours per week, or at least 1,040 per year, which only excludes seasonal workers and those working very few hours.

Shanahan says that all the people who stay with the company for more than a couple years are typically over those thresholds.

“For our ESOP, it was important to have a large tent,” Shanahan says. “I’ve seen some companies where only 10 percent of the highest-salaried people are in it.”

The ESOP structure, according to Shanahan, only entitles employees to be involved with large decisions, such as the sale of the company. The rest of the decision-making will continue through the traditional hierarchy of executive management and its board.

“That being said, with our style of management being bottom up, we want our people to have a lot of say, and we intend to continue on that path,” Shanahan says.

The company is exploring how exactly that bottom-up decision structure manifests, and could, like some other companies, enable employees to vote on how much of a raise they’re going to have every year.

“But again, that’s not ESOP-driven as much as something that we’d like to do. We just think that’s our style of management here,” he says.

Shanahan, who’s been in the grocery business his entire career, says he promotes the bottom-up management approach because he’s seen it work very well. Some 2,000 Buehler’s employees spend their time on the front lines interacting with customers. They have valuable information about what’s going on, and it’s critical that they communicate what they see with management.

“We need them to all be ambassadors,” Shanahan says. “The perceptions that we have in the marketplace really begin and end with their interaction.”

The other benefit of that philosophy, he says, is employment and retention.

“Retaining people is very valuable for us. If we have higher turnover, it’s very expensive and you can’t operate the way you want to operate because you’re turning people and continuing to re-train people,” Shanahan says.