Opens Line of Credit and Reserves an Option to Merge
In a last minute save, John Catsimatidis opens a line of credit to the failing D’Agostino chain, down from 25 stores to 9, and holds an option to merge with Gristedes
By Caroline Benveniste
We interviewed Nick D’Agostino in April and wrote an article on the history of the namesake store. George Capsis had been working with Bob James, President and Chief Operating Officer of D’Agostino, to come up with some special pricing for seniors to fill the hole left by the Associated Supermarket’s passing. While both Bob James and Nick D’Agostino seemed genuinely interested, their only action was to extend their 10% senior discount so it was available every day rather than just once a week (and even then we received an angry letter from a reader who complained that to get the discount you had to purchase $30 in groceries which most seniors do not). George was becoming impatient, but it soon became clear that D’Agostino was having serious problems and that they had more dire issues to focus on than senior discounts.
While we had all heard rumors about D’Agostino’s precarious financial situation, we were now receiving pictures of empty shelves at the Greenwich Street store from our photographer, Maggie Berkvist. At certain times, there would hardly be any merchandise, then a delivery would arrive, items would reappear, and then the slow inexorable decline would begin again.
Finally in August, we all read in the New York Post that John Catsimatidis, owner of Gristedes, had stepped in to help D’Agostino and had offered them a credit line so they could restock the shelves. Sure enough, right after that we started receiving new photos from Maggie showing shelves overflowing with products.
We did try to speak with Nick D’Agostino and Bob James, but we did not learn much. So George decided, one Greek to another, to contact John Catsimatidis directly. George had previously met Catsimatidis and marveled at some of the parallels in their lives, the most striking being that they had both grown up on the same block of West 135th Street and gone to the same public school. They also both had houses on the east end of Long Island and attended the same Greek Orthodox Church out there.
Catsimatidis agreed to see us, so George and I got in a taxi and headed to his midtown office. On the way, George told me about how Catsimatidis was born on a small island in Greece called Nisyros. Nisyros is a volcanic caldera, and an active one at that. The island had been Turkish until the early 1900s, and then Italian until 1947. Catsimatidis was born in 1948, and by that time the island was Greek. His father was the lighthouse keeper, and when Catsimatidis was 6 months old his father brought him to the United States. At this point in the conversation, I noted that my great-grandmother was from a small village in Greece that had been Turkish previously. George was amazed, as he did not realize that I had Greek ancestry; I explained that in fact both my parents had emigrated from Greece to the United States in the 1950s.
Once we arrived at the office, we walked through the hallway to get to the conference room where we were meeting. On the walls, photos of Catsimatidis and his businesses were everywhere. There were photos of his real estate projects, and his oil business. There were framed newspaper articles about him and large sections of photos of him and famous people. The Clintons were a recurring theme.
We had come to discuss the fate of D’Agostino, but while we were there the conversation kept veering towards Greek topics, maybe because we were all three of us Greek, or maybe because Catsimatidis likes to speak about Greek matters. He must have asked me at least three or four times, “Giatí den milás Elliniká” which means “Why don’t you speak Greek?” He had just returned from a vacation in Greece and was full of stories about that. He had flown there on his private jet, and had made a visit to Nisyros. He showed us some photos of his family on the island, including some of a service at the small Greek Orthodox Church there. He proudly showed us an article that had just appeared in the New York Times about his island: A music festival had been held there, and the musicians had played for over 10 hours overnight in the crater. We found out that the main reason for the Greece trip was that Catsimatidis had been honored by the Greek government with the entrepreneurship award of The International Foundation for Greece at an event that was held at the Acropolis Museum on September 1st. Catsimatidis, along with the four other recipients including George Stephanopoulos and Costa Gavras, had special stamps with their likenesses issued by the Greek Post Office as part of the series “Distinguished Greek Personalities.” We were shown a framed blow-up of the stamp, and some photos of the posh celebration overlooking the Acropolis.
While Catsimatidis had started his working life in the grocery business, today, the real money-making part of his empire consists of his real estate and oil businesses. Not surprisingly, they are much more lucrative than Gristedes, because, as we have written about repeatedly, it is tough to be in the grocery business these days in New York City. Back in 2011, during his mayoral run, the New York Times ran an article about him with the title “A Candidate With a Store Chain Around His Neck”. In the article, Catsimatidis is quoted as saying, “My life would be better without Gristedes.”
So we wondered, why would he invest in another grocery business, particularly given that it was in such precarious financial shape? We asked why he had stepped in and given D’Agostino a line of credit, and he said that without that they would have gone under. He explained that he had invested around $10 million so far. From some of his other comments, we got the impression that he also had an option to take over D’Agostino and that he was likely to exercise that option. But if he did, he would probably keep them as separate brands. George asked him that if hypothetically the two chains merged, would he be the senior partner, to which he replied, “I am always the senior partner.”
We questioned him about the advantage of adding the remaining nine D’Agostino stores to his grocery business, and he explained that there would be some economies of scale. Then we asked again why he would spend $10 million to help D’Agostino, and he gave almost the same answer he gave last year to a Crain’s reporter when asked why he was investing $10 million to refurbish the Gristedes stores. To paraphrase, he stated that with $10 million he could buy another plane but he didn’t really need one. (In fact, he had been an avid pilot but gave it up after his children were born).
We may not have found out very much, but The Villager found out even less. Right before we left Catsimatidis’ office, his cell phone rang and he did not recognize the number but answered it anyway. We could tell from what he said that it was The Villager calling to find out about his investment in D’Agostino. He told them that it had been widely reported and that they could read about it in the New York Post.