AppleTree Markets

AppleTree Markets

Company type	Private
Industry	Supermarket
Predecessor	Safeway (Houston division)
Founded	1969
Defunct	2012
Fate	Closed operations
Headquarters	Bryan, Texas , United States
Area served	Greater Houston, Greater Austin, Bryan-College Station, Texas
Key people	M. Dean Gantt (former president and CEO), Arthur L. Patch (former CEO), Fred R. Lummis (former CEO), Tony Kubicek (former CEO)
Products	Grocery stores

AppleTree Markets was a supermarket chain operating in Texas, established in 1969 when Safeway launched its initial stores in Houston. In 1988, these stores were separated and rebranded as AppleTree. At its peak, the chain managed around 100 locations across Greater Houston and Greater Austin. By January 21, 2002, AppleTree had scaled back to just two outlets based in Bryan, Texas, where the company had relocated its headquarters. One of these remaining stores was sold in 2009, while the final store—situated at the intersection of Highway 21 and Texas Avenue in Bryan—ceased operations in early 2012, signaling the chain’s closure.

Safeway

In 1988, Safeway decided to divest its Houston division, which had been active for 18 years, as part of an effort to generate funds to reduce debt incurred from a $4 billion leveraged buyout completed in 1986. On June 14 of that year, Safeway reached an agreement to sell this division to Texas Supermarkets Inc., a holding company created by local investors Duncan Cook & Co. and the Sterling Group. This transaction encompassed 50 Houston stores, 20 locations in Austin, additional outlets across 23 East and Central Texas communities, plus a distribution center, frozen food warehouse, bakery plant, and milk processing facility. Valued at $174 million (approximately adjusted for inflation), Safeway’s market share in Houston was about 18 percent at the time, ranking third behind Kroger at 27 percent and Randall's Food Markets at 21 percent. M. Dean Gantt, who previously managed Safeway’s Houston division, took on the role of president and CEO of Texas Supermarkets Inc., which initially owned only eight stores outright while leasing the remainder from Safeway. Although Texas Supermarkets was permitted to operate under the Safeway brand until June 28, 1989, they continued using it until July when AppleTree Markets branding began to appear. Additionally, five locations were converted into Budget Stores offering lower prices on select items but with fewer specialty departments such as delis, bakeries, and floral services. The transition away from the Safeway name concluded by September 1989.

Following an unexpected retirement by Gantt in October 1989, Arthur L. Patch—formerly senior vice president at Lucky Stores Inc., based in Dublin, California—was appointed as his successor in November of that year.

Bankruptcy

AppleTree Markets faced significant difficulties managing the debt incurred from the 1988 leveraged buyout of Safeway's regional stores. Efforts to restructure this financial burden were unsuccessful, leading the company to file for Chapter 11 bankruptcy protection in 1992. Shortly after initiating bankruptcy proceedings, AppleTree revealed plans to shut down several locations. In March of that year, Arthur Patch stepped down as CEO, with Fred R. Lummis, the board chairman, assuming leadership.

Compounding these financial challenges was the aging condition of many stores. Most of the former Safeway outlets in Houston dated back to the late 1960s and early 1970s, having undergone minimal updates aside from a logo change in the early 1980s prior to AppleTree's acquisition. Additionally, numerous stores originally part of Weingarten's, acquired by Safeway in 1983, were even older. Only a few Houston Safeway stores built in 1986 featured a more modern design and larger format.

To reduce expenses and generate liquidity, AppleTree continued closing or divesting stores to competitors such as Fiesta Mart, Gerland's Food Fair, and Market Basket. The company also sought to relocate its headquarters to a smaller facility and planned to close its distribution warehouse. Previously, AppleTree had its corporate offices located in Houston's Spring Branch district.

Under its reorganization strategy, AppleTree announced intentions to close or sell an additional 33 stores. Despite attempts to stabilize operations, by November 1993 the company decided to sell all remaining 49 supermarkets to rival chains. Among the buyers, Randall's Food Markets acquired eleven sites in Greater Austin and three in Greater Houston. Other purchasers included Kroger (eleven stores), Gerland's (five), Fiesta Mart (four), Rice Food Markets (three), and single-store acquisitions by Cox's Foodarama, Big Chief Super Markets, Stanley Stores, and Super Warehouse Foods. Notably, some former Safeway locations purchased by Randall's later returned to Safeway ownership following Randall's acquisition by Safeway in 1999. One store at 8620 Stella Link transitioned into a Sellers Bros. outlet.

Due to the downsizing of its store network, AppleTree’s large northwest Houston grocery distribution center—which included a 119,000-square-foot (11,100 m²) refrigerated warehouse, an extensive bakery, and a major dairy processing plant—exceeded the company’s operational needs. Owned by Safeway at the time, this facility was sold to H-E-B. Consequently, AppleTree shifted to purchasing dairy products from external suppliers and relocated its headquarters to a new building in northwest Houston.

Independent Chain and Store Closures

Following the asset sales, AppleTree was left with six locations: three in Bryan-College Station, two in Houston, and one in Huntsville. Tony Kubicek, AppleTree's CEO, acquired these remaining six stores and intended to continue operating them as an autonomous, Houston-headquartered grocery chain under the AppleTree brand.

Despite these efforts, the chain struggled to maintain its footing. After shutting down the sole Huntsville outlet and one of the two Houston stores, AppleTree closed its final Houston location in 1997. This left the company with three stores in Bryan-College Station, where it eventually moved its corporate headquarters.

The company further contracted by closing its College Station store in 2002, reducing operations to two Bryan sites. In February 2009, AppleTree sold its Bryan Briarcrest Drive store to local businessman Jim Lewis. Lewis transformed this site into Village Foods, a new grocery store that rehired all former AppleTree employees displaced by the closure. The last remaining AppleTree store, located at Highway 21 and Texas Avenue in Bryan, ceased operations in early 2010.

At present, three supermarkets continue to operate under the Apple Tree name in San Diego, California.