Empty shelves and few shoppers finally forced Eden Teva Market, Israel’s biggest chain of organic-food supermarkets, to put nearly a fifth of its employees on forced vacation starting next week.
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The chain, which is 51%-owned by the ailing supermarket chain Mega, said Tuesday that 107 of its 600 staff were being ordered to take their vacation time now. It will only be for a few days, but after they return another group is likely to be ordered to take time off as well.
“There’s nothing else we can do – the stores are empty. We worked hard not to make workers who haven’t accumulated vacation time take leave, and some of those who are going are taking their holiday time voluntarily,” said Guy Provisor, Eden Teva Market’s CEO, whose owns the other 49% of the chain.
Eden Teva Market’s suppliers, including Israel’s biggest food makers like Osem, Strauss and Tempo, stopped deliveries after the chain failed to pay them. Provisor is locked in a dispute with Mega over whether he is required under their joint venture agreement to inject more capital into the chain, and if so, under what terms.
Meantime, Mega, which collects much of Eden Teva Market’s turnover because most of its branches are located inside Mega supermarkets, has ceased transferring money to the organic-food chain or paying its suppliers.
Mega itself is in deep financial trouble as well, after running up losses of 239 million shekels ($61.2 million) in 2013-14, and is seeking to reduce part of the red ink by renegotiating contracts with labor unions.
In a meeting Monday, executives of the Alon Group, the closely held holding company that controls Mega, made significant progress in negotiations with the workers’ committee, which is being presented by Yaron Zelekha, an academic and former Finance Ministry accountant general.
Participants disagreed about the value of the pay cuts under discussion, with some saying it would amount to 30 million to 40 million shekels and others as much as 60 million. Either way, industry estimates are that Mega is paying salary costs of 150 million shekels more than other supermarket chains for its 6,500 workers.
On Sunday, Rami Levy – Israel’s biggest discount food retailer – said it was in preliminary discussions to buy Mega, although industry observers said the odds of a deal emerging are relatively low.
The news sent shares of Alon Blue Square, the company that directly controls Mega, up more than 13% Sunday and Monday. On Tuesday, however, the stock ended down 2.7% to 10.25 shekels.