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Food Lion co-founder Ralph Ketner dies at 95

By Mark Wineka

mark.wineka@salisburypost.com

SALISBURY — Ralph Ketner, the Food Lion co-founder who famously said he would rather make five past pennies than one slow nickel, died Sunday afternoon at the age of 95.

“My dad died in my arms tonight at 5:26 p.m.,” his daughter Linda Ketner said in a Facebook post. Ketner had been diagnosed with colon cancer earlier this year. Services will be held on Sunday, June 5, 2:30 p.m., at Keppel Auditorium on the Catawba College campus. 

In business, Ketner built a reputation as a genius with numbers. He bet the company on a low-pricing concept that eventually became known as LFPINC — Lowest Food Prices in North Carolina. It propelled the sleepy, Salisbury-based grocery chain and its stock to incredible growth and national prominence.

Ketner and his lieutenants also installed a system of forward and centralized buying, merchandising, store location, distribution, cost-cutting, training and employee incentives that complemented the chain’s pricing concept.

Within two decades, Food Town, which changed its name to Food Lion in 1983, became North Carolina’s largest publicly held retailer. By 1982, Forbes magazine had dubbed the company America’s fastest growing grocery chain. By 1990, Food Lion was among the Top 10 grocery chains in the United States.

Today, Food Lion has more than 1,100 stores in 10 Southeastern and Mid-Atlantic states and employs more than 63,000 people. Serving 10 million customers a week, the grocery chain is part of Delhaize America, the U.S. division of Brussels-based Delhaize Group.

A tenacious buyer and demanding boss, Ketner set the prices — and usually knew the prices — on every item in Food Lion stores. He built a  company culture, a Food Lion personality for which recruiters actually tested.

Ketner led by example. As chief executive officer and chairman, he worked long hours, poring over every sales report, deliberating on every price, examining each store lease and doggedly getting after his staff to find him answers. Employees knew to take a notebook and pen with them into Ketner’s office because he usually gave them a list of things to research.

“With me, 98 is failing,” Ketner said once. “If you’re going to make 2 percent errors in business, you can’t make it.”

The love of work and the love of winning at work seemed to drive Ketner,

Linda Ketner, a resident of Charleston, S.C., headed Food Town’s first training department in the mid-1970s. In the last few months, as his health was declining, she stayed with her father around the clock.

“I know my dad never worked to get rich,” Linda Ketner said in a past interview. “I mean, when I was growing up, I never heard him talk about money, wanting things. Dad’s the most unmaterialistic person I’ve ever been around. It wasn’t his motivation. His motivation was he loved to work. He loved to achieve.”

As competitive as Ketner was with Food Lion, in retirement he mellowed considerably and became a great advisor and philanthropist, donating millions of dollars to local, state and national causes.

Others followed his lead. From one Salisbury store in 1957, Food Lion grew phenomenally to make millionaires of Ketner and scores of the original small-town investors. Salisbury and Rowan County especially benefited from the company’s success and generous stockholders.

After his retirement in 1991, Ketner became executive-in-residence at Catawba College, and he reported daily to his office in Ketner Hall, the business school named for him. He enjoyed an occasional public-speaking event, lectured business students and welcomed them into his office for long chats. Entrepreneurs routinely visited him for free advice.

For a time, Ketner also used his own personal wealth to travel with his second wife, Anne, and overall he found numerous ways to help others, from the homeless to first-time homeowners.

“I believe it’s true that you make a living with what you get, but you make a life with what you give,” Ketner said.

•••

Born Sept. 20, 1920, in the Rimertown community near the Rowan-Cabarrus County line, Ralph Wright Ketner was one of seven children — five boys and two girls — born to George Robert “Bob” Ketner and Effie Yost Ketner. The fourth son, Harry, lived only six days in 1919.

Bob Ketner farmed and butchered, taking beef, veal and pork to Salisbury and Concord markets. Exasperation over what he had to pay retail for meat led Ketner to buy Taylor’s Meat Market in Salisbury in 1923 and move his family to the bungalow behind it. Ketner eventually added groceries and went to a cash-only operation.

Thus started the Ketner’s family long association with the grocery business.

Bob Ketner operated six Ketner’s Cash and Carry stores by 1931, including a store in Kannapolis. The father was a flamboyant promoter and always invited customers to compare his prices with other stores, much like son Ralph would do with Food Town.

Ralph Ketner learned to kill and dress chickens in the back yard of the family’s house in Salisbury, receiving a penny for each plucked chicken. He disliked school so much that in the first grade he ran home and hid under the house. Except for subjects dealing with numbers, Ketner maintained his dislike for school for much of his childhood.

A Salisbury flu epidemic claimed his mother’s life on March 10, 1926, when she was only 33. Ketner, 5 at the time, almost died, too. As part of his treatment, doctors had to put a tube in his side to drain fluid from his lungs.

Bob Ketner later married Allene Glover Lyerly, who played a big role in raising Ralph and his two younger sisters, Mary and Dorothy. On a late February night in 1932, a substitute doctor wrongly diagnosed Bob Ketner’s appendicitis as constipation. His appendix burst, peritonitis developed and killed him after several days. Ralph was 11.

The father died without a will and had never incorporated his businesses. The stores had to be auctioned off to settle his estate. Ralph’s oldest brother, Glenn, only 21, was able to buy the Kannapolis store with the help of his wife’s family. He soon assumed the role of family patriarch.

•••

As a youngster, Ralph became a crackerjack bowler in the duck-pin lanes of Salisbury. His other major pastime revolved around earning personal spending money. He worked in his father’s, then brother’s, stores, peddled ice cream and hawked newspapers.

Because of his proficiency with numbers, his family sometimes pulled him out of school when a Ketner’s Cash and Carry needed an extra clerk. As a high schooler, Ralph hitchhiked the 16 miles from Salisbury to Kannapolis to work in one of Glenn’s stores, usually catching a ride back to Salisbury with the 11 p.m. shift change at Cannon Mills.

Ketner took his share of money from the settlement of his father’s estate and attended Tri-State College in Angola, Ind., in 1937. He liked Tri-State because it allowed him to start courses in his accounting major from the beginning and offered 48 weeks of school each year. He completed his accounting courses and advanced auditing, but failed to navigate public speaking, even though he took it five times.

Ketner suffered from severe stage fright: “Every time it was my turn to talk, I would drop the course,” he said. He eventually ran out of money and returned home, lacking six months to graduate.

By this time, however, Ketner was a stubborn, independent, restless young man who would spend the next several years bouncing from one job to the next, serving in the military for 45 months, getting married and finally looking to settle down when his wife, the former Ruth Jones, became pregnant with their son, Robert.

In the Army, Ketner shipped out with his unit to assemble auto parts in Casablanca. He became the unit’s head auditor. Stateside, his many jobs included stints with his brother Glenn’s grocery operations, Cannon Mills, Central Motor Lines, the Army Exchange, a Philadelphia appraisal company, the Internal Revenue Service, the State Department of Revenue and others. He stayed in the grocery business for good when he took a position in brother Glenn’s warehouse.

Ralph Ketner, brother Brown Ketner and friend Wilson Smith played important roles in Glenn Ketner’s grocery stores, which became self-service markets and ushered in pre-packaged produce and meats in North Carolina.

In early 1956, Glenn Ketner merged his eight stores with 15 smaller Piggly Wiggly stores in eastern North Carolina, thinking he could some day fill in the space between Raleigh and Salisbury along the new Interstate 85.

But weeks later, Glenn Ketner agreed to sell to Winn-Dixie in exchange for important North Carolina jobs in the bigger grocery chain for himself, his brothers and Smith. The former Salisbury grocers and many of the people who used to work for Glenn Ketner soon soured on their Winn-Dixie responsibilities and began talking about starting their own grocery company from scratch.

•••

Glenn Ketner had signed a no-compete agreement, leaving him to focus on his many properties. But Ralph Ketner, Brown Ketner and Wilson Smith believed they had a strong nucleus among themselves to start a new store to compete with the likes of Winn-Dixie, Colonial and A&P.

From their own funds, the trio could put up only half of the $125,000 they needed. To raise the rest, they paged through the Salisbury telephone book, writing down names of people they knew to approach about investing in their venture. Ralph Ketner was 37 at the time.

Ketner and his cohorts successfully raised the additional $62,500 from all walks of life: teachers, railroaders, bankers, doctors, salesmen, housewives, attorneys, druggists, mill workers, merchants and mailmen. Some people paid as little as $50 for five shares, or as much as $1,000 for 100 shares of Food Town stock. While certain investors who initially said yes to buying stock backed out, the others who stuck with the Ketners and Smith did it out of friendships and on faith from the men’s experience with Glenn Ketner’s operation.

On Dec. 12, 1957, on a bitterly cold day, the men opened the first 15,000-square-foot Food Town store in a new shopping center on the west end of Salisbury. Their landlord: Glenn Ketner.

Surviving an early price war with other Salisbury stores that almost put them out of business, the Food Town founders opened a second Salisbury location within a year. But after 10 years of what Ralph Ketner came to call “research and development,” Food Town had opened 16 stores and closed or sold nine of them. Annual sales were only $5.8 million, and earnings totaled less than $37,000.

“We didn’t deserve to succeed,” Ketner said once, looking back, “because all we were was a ‘me, too.’ You make a car as good as somebody else, you haven’t offered anything to the public they didn’t already have.”

A signature moment for the company came on a November morning in 1967, when Ketner, the company president, arrived at the Manger Motel in Charlotte with five big cardboard boxes, a card table and an adding machine.

The boxes contained six months worth of invoices. Ketner planned to take the numbers from those invoices and install a new, low-pricing formula that he had read about in Ohio.

Ketner knew if he failed he would wreck the company.

Over three feverish days, Ketner reduced every price in the Food Town stores and littered the motel room floor with wads of paper calculations. He cut 10 categories of food to cost or below, including cereals, coffee, shortening, rice, grits and detergent.

He figured that roughly one-sixth of everything in his warehouse could be sold at cost or less and decided to sell the rest of his groceries between 6 and 10 percent cheaper than his competitors.

Ketner hoped the lower prices on everything would create a new kind of customer excitement, leading to a dramatic increase in the volume of sales — a volume big enough to compensate for the lost margins.

“I’d rather make five fast pennies than one slow nickel,” he explained years later. “It separates the men from the boys. We’d rather sell five cans of beans at 2 cents profit and make a dime, where our competitors would rather sell two cans at a nickel profit each and make the same dime.”

•••

After all the price-cutting, Ketner determined he had sliced into his company’s gross profit by 60 percent. When he emerged from the motel room and headed for home, Ketner knew Food Town could break even with this across-the-board cost-cutting if sales increased at least 50 percent.

Always a gambler, Ketner bet the company on what he came to call “The Big Change.”

“Advertisement is whatever causes the customer to trade with you,” Ketner said. “Low price is the best advertisement in the world.”

Ketner’s low-pricing concept hit a nerve with the public. He promised to save his customers money, and they believed him after shopping at Food Town. He didn’t cheat on the concept once he saw that it worked. Indeed, the more successful it was, the more he lowered prices. It became his obsession, and Food Lion employees became equally impassioned to keep costs — and prices — as low as possible.

He once told his office staff members they must memorize the multiplication tables — the 12th table up to 50 — so they wouldn’t have to waste time on adding machines. He periodically tested them with flashcards.

Ketner and the other Food Lion executives always worked on Saturdays. He discouraged any hobbies, memberships or outside interests that robbed time from Food Lion.

As the low-pricing concept caught on, the company’s rallying cry became “LFPINC.” In 1968, Food Town sales went from $5.8 million to $8.95 million — a 54 percent increase that Ketner figured was more like 80 percent, based on projections for the year after the first two weeks in January without “The Big Change.”

The company took off, finding a niche with low prices, while being efficient, convenient and neighborly.

As Food Town grew, Ketner hired a former bag boy, Tom Smith, as a buyer for his warehouse in 1970. He promised Smith that some day he could be president, if he stuck with the company. He also gave Smith the first company stock option and fulfilled his promise by making Smith company president by 1981.

 In 1974, looking for an infusion of cash to spur his company’s growth and finally give original investors some cash value for their stock, Ketner negotiated a deal allowing the Delhaize company of Belgium to acquire 34 percent of Food Town. By 1976, Delhaize acquired 51 percent of the company but remained in the background, allowing Ketner to run things.

The name change to Food Lion came out of necessity, to allow the company’s expansion westward into Tennessee, where stores named “Food Town” already existed.

Ketner saved the company $500,000 in signs by suggesting the “Lion” name, because it meant that only an “L” and an “I” would have to be purchased for the block letters outside every store.

•••

Growing older, Ketner relinquished the chief executive officer title to Tom Smith in 1986 and remained chairman of the board. He officially retired in May 1991, took the title of chairman emeritus and moved to his office at Catawba College.

Ralph and Anne Ketner had given $3 million to the college to help establish the Ketner School of Business.

By 1991, at his retirement, a person who had invested $1,000 with Food Town in 1957 would have had stock worth about $23 million.

Ketner remained a shareholder but over recent decades distanced himself from the company’s operations, which he had micromanaged for more than 30 years.

In retirement, Ketner initially became a sharp critic of Food Lion, especially in its handling of the 1992 “PrimeTime Live” television report on Food Lion’s meat handling practices.

He shocked many people by “divorcing” himself from the company and not seeking re-election to the board in 1993, but it had not stopped Ketner, as a shareholder, from questioning many of the company’s business decisions and its ever-changing corporate structure.

Recent Food Lion presidents made it a point to reach out to Ketner, and he enjoyed the reconnection and meeting with employees at functions such as annual picnics.

Contact Mark Wineka at 704-797-4263.

 

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