More lucrative than GameStop: Food Lion (in 1957)
Plus: Local Covid numbers improving; BofA CEO encouraged by consumer spending; City Council to choose new council member tonight; Suicide hotline calls up 12%; Ledger tackles TikTok
Today’s Charlotte Ledger is sponsored by Sinclair Public Affairs:
Stock flashback: When forgotten grocery investments from the Eisenhower era created unexpected millionaires in Salisbury
By Jeremy Markovich
The GameStop stock story is changing by the day. And if you’re captivated by it, then listen up: I have another great stock tip for you. All you need to do is get into a time machine here in North Carolina, go 64 years into the past, buy some shares of Food Lion, then forget about them for approximately two to three decades.
It will make you into a millionaire. I guarantee it.
Back in 1957, a man named Ralph Ketner and his business partners wanted to open a grocery store in Salisbury but didn’t know anyone who could give them a lot of money. So they started calling people they found in the phone book, asking if they might like to invest a little bit of cash in their new store. They started at $10 a share. Of the roughly 250 people Ketner and his partners called, about half of them bought in, including mill workers, a doctor, a builder and a linotype operator. They took down names and amounts on a legal pad.
Food Lion (then called Food Town) didn’t make much money at first. Then Ketner figured out that he could lower his prices and cut his overhead, and save by buying in bulk. Ketner later explained it by saying he’d rather make “five fast pennies instead of one slow nickel.”
That low-cost, no-frills mantra made the company into a wholly inglorious place to work (executives never flew first class and Ketner had linoleum flooring installed in his office). It also transformed Food Lion into the fastest-growing grocery store chain in the country. What once was a small company with seven stores in 1967 added hundreds more over the next two decades. Sales grew 37% per year during that time. “It’s a machine,” a stockbroker remarked to Fortune in 1988. “Year in, year out, with no variation. It’s the most consistent growth company I’ve ever seen.”
To keep stock prices low to encourage more investment, Food Lion split its shares over and over again. That exponentially increased the amount of shares held by the people who’d originally bought in back in 1957. By 1988, the stock had split 12,960 ways. That meant anyone who’d bought and held on to at least $28 worth of original Food Lion stock was a millionaire. Some 87 people had.
It was one of the most insanely lucrative investments in American history, outperforming Walmart and Microsoft. The people Ketner picked out of a phone book became fabulously wealthy. Salisbury had more millionaires per capita than any other city in the country.
At one point, Ketner figured that one out of every four of those millionaires had no idea what they were worth. A few years ago, I wrote about the case of Zeda Barger for Our State magazine. Barger was an 81-year-old widow who, in the 1980s, got a visit from Ketner, who came to her house asking for a large donation to renovate a dorm at Catawba College.
“I don’t have any money,” she said. To get by, her sister had been sending her money to supplement her Social Security checks. Still, Barger knew who Ketner was. She and her late husband, a druggist named J.J., had made a $500 loan to Ketner way back in the summer of 1957, when Food Lion (then Food Town) was struggling to open its first grocery store in Salisbury.
“Zeda, you didn’t loan it to me,” Ketner said of the money. “You bought stock in the company.” That $500 was now worth $2.5 million. The original stock certificates had been sitting in her dresser drawer.
Barger’s name is still on a dorm at Catawba College today.
If you’ve been to Salisbury and are wondering why it seems so well preserved, Food Lion stock is why. Many of the original investors put their money back into town by making large investments or charitable donations.
The gorgeous train depot downtown was preserved, in part, by money from Food Lion stock. Ketner himself built affordable housing. He renovated a 7-story building downtown. He donated 35% of his wealth before his death. Today, Salisbury, population 33,727, has a symphony orchestra. It has public art. Historic homes and landmarks have been kept intact. Catawba College and the local hospital have all received large gifts of Food Lion stock. The Norvell Theater is named for Lucile Proctor Norvell, who called her shares her “givin’ away money.”
If you’re looking to get in on Food Lion’s meteoric growth, that time has passed. The company was bought in 1974 by Delhaize, a Belgian company that has since merged with Dutch-owned Ahold. The growth started to slow. The philosophy changed after Ralph Ketner’s retirement (he groused that executives had started flying around in private jets).
All of the missing millionaires have been found, and many have died, which means their fortunes have either been donated or split up among family. Salisbury can no longer reliably rely on people with stock to help out around town. “The Food Lion era is coming to an end,” Ronnie Smith, a former shareholder and son of co-founder Wilson Smith, told me back in 2016.
But, literally, the best thing that could have possibly happened to you was to have bought a few shares in the early days of Food Lion, and then forgotten about them for a very long time. As a Fortune reporter found back in 1988, not everybody did that:
Jim Woodson tired of pushing a mower around his two-acre backyard. Eyeing Food Lion’s stock in the early 1970s, he thought, “Maybe I can make a couple of dollars and buy me a nice riding mower.” He bought about 400 shares, took several thousand dollars in profits shortly after, and, pleased with himself, bought the mower. Thus, the 72-year-old attorney’s Food Lion tale became the saddest in Salisbury: That stock would be worth $3 million today. “I would think it's one of the most expensive riding lawn mowers in North Carolina,” he says laconically. At least it has run faultlessly. Says Woodson: “If it ever gives me any trouble, I think I’ll call Ralph and ask him to have it fixed.”
—
This article is adapted from this morning’s edition of the North Carolina Rabbit Hole newsletter — which also explains the GameStop stock story through a series of Indiana Jones GIFs.
If you’re interested in strange stories from this state’s past and present (like an anti-vulture propane cannon in Bunn, late dictator Hugo Chávez’s visit to Hickory, and the real story behind a GIF of Hugo the Hornet getting smacked in the face), click or tap here to subscribe for free.
Today’s supporting sponsors are Landon A. Dunn, Attorney at Law in Matthews …
… and T.R. Lawing Realty:
Health director: Covid numbers ‘moving in the right direction’
At a news conference on Friday, county health director Gibbie Harris gave a status update on Covid. Among the highlights, she …
… noted that local Covid numbers have fallen — hospitalizations are down 32% in the last two weeks — and the number of new cases and percentage of positive tests are lower. “Our metrics are moving in the right direction. Unfortunately, they are still very high.”
… expressed concern about the discovery of a new strain of the virus in Mecklenburg, and a second one in South Carolina. Those new variants are believed to be more contagious and possibly deadly, which Harris said underscores the need to stay home.
… revealed that she had advised Charlotte-Mecklenburg Schools not to restart sports. CMS, though, announced last week that sports will resume at the end of this week.
… reaffirmed her belief that schools should reopen. Asked if the discovery of new Covid strains is a reason to place reopening plans on hold, she said: “At this point, it’s not, I don’t believe.” She cited research that shows that schools are not major sources of transmission, provided they have safety measures in place, and said: “We’ve watched our numbers. We’re seeing them going down. … The plans are to move forward with bringing the children back into school. … I think we need to move forward.”
BofA customers’ spending is way up, CEO says
Bank of America CEO Brian Moynihan says he’s upbeat about prospects for the country’s economic recovery.
Appearing on Fox Business Network’s Barron’s Roundtable on Friday night, Moynihan said bank economists last week raised economic growth estimates — and that the Charlotte-based bank’s customers are spending a lot more than they did a year ago, before the pandemic even hit:
Our research team upped their GDP estimate for 2021 for the United States from 5 to 6%, which is a pretty strong increase on a big economy like the United States, so that was good news.
And the second big thing in the economy, which will long-term show up in the stock market over time, is that we have seen, in the month of January so far, our Bank of America consumers spend at 9% greater rate this year than they did last year. …
Consumers that have the money and are employed — and there’s a lot of them that still need help — are out there spending, and that’s good news to the economy long-term, too.
He sidestepped a question about his opinion on trading in GameStop, saying only that there’s “a lot of volatility out there” and that it was an “interesting week.” —TM
In brief:
City Council pick: The Charlotte City Council is scheduled to select a replacement tonight for at-large council member James Mitchell, who resigned last month to take a new construction job. As of Sunday night, the top two contenders were thought to be former council member Greg Phipps and former candidate Jessica Davis, according to Ledger sources. Because Mitchell is a Democrat, council members must select a replacement from the same party. Democrats will hold a 9-2 advantage on the council after the selection.
Wells Fargo CEO pay: Wells Fargo CEO Charles Scharf received $20.3M in pay in 2020 — a 12% drop from a year earlier, according to a regulatory filing. In 2020, Scharf received $2.5M in base salary, a cash incentive compensation of $4.4M and $13.5M in long-term incentive compensation. (Wall Street Journal)
HR merger: The Employers Association, which provides human resources services to Charlotte-area businesses, has merged with Capital Associated Industries, a similar company based in Raleigh. The combined entity will be known as Catapult. An announcement is expected today.
PPP loan update: The Small Business Administration has approved nearly $447M in loans for 5,400 North Carolina businesses in the latest round of Paycheck Protection Program loans, the SBA said. Nationally, Charlotte-based Bank of America has provided the most loans — nearly 13,000 loans with an average loan size of $42,000. (Small Business Administration)
To-go cocktails — do they matter? A few weeks after the state allowed restaurants to sell to-go cocktails, the move “doesn’t seem to be a lifesaver for restaurants/bars in Charlotte, nor a major new revenue source,” Charlotte Agenda concluded.
Suicide calls increasing: The number of callers receiving services from North Carolina’s suicide hotline rose 11.5% compared with 2019, according to the N.C. Department of Health and Human Services. The state received a $130,000 grant to start implementing a national three-digit suicide hotline number beginning in July 2022. The new number will be 988, replacing the current 800-273-TALK. “Many North Carolinians are feeling more isolated, overwhelmed and experiencing higher levels of anxiety and depression due to the pandemic,” an NCDHHS deputy secretary said in a news release. Suicide figures for 2020 are still being tallied. (NCDHHS)
South End apartments: Two office buildings on a 1.9-acre site at South Church and West Bland streets will be demolished to make way for a 304-unit apartment building called Haven South End. It’s a project by Haven Communities, Wheelock Street Capital and Patterson Real Estate Advisory Group and is scheduled to break ground this summer and be completed by mid-2023. (Biz Journal, subscriber-only)
Big trading losses: Melvin Capital Management, the main hedge fund suffering from last week’s stock market turmoil, lost 53% in January. Its founder, Gabe Plotkin, holds a minority stake in the Charlotte Hornets. (Wall Street Journal)
Duke vs. UNC Zoom trivia: The student newspapers of Duke and UNC Chapel Hill are looking for people to compete in an online trivia competition Thursday at 7 p.m. in teams of 1-3 people. There’s no entrance fee, though donations are happily accepted and benefit student journalism at each school. On the line: Cash prizes up to $150, swag and bragging rights. Enter at bit.ly/RivalryTrivia. A Zoom link will be sent via the confirmation email.
40 Over 40 TikTok Takeover
Why should millennials and Gen Z have all the fun with TikTok, the video-sharing social media platform?
We like to stay up to date on the latest trends and harness their power for good — in this case, letting people know that The Ledger’s 40 Over 40 awards are open for nominations. Last year, we hired an influencer. This year, we’re cutting some TikTok videos to spread the word, and we’re improving upon them by imbuing them with Gen X sensibilities and decent music.
You can enjoy our first one below — a classic hit from 1969, blended with a Charlotte growth-and-development theme:
We’ll share more in the next couple weeks (without the need for you to actually register with TikTok and share your personal data with a company linked to the Chinese government).
In the meantime — whether the first-ever Ledger TikTok inspired you or not — why not nominate someone today? We’re recognizing people aged 40+ who are making a difference in Charlotte. Details here.
Taking stock
Unless you are a day trader, checking your stocks daily is unhealthy. So how about weekly? How local stocks of note fared last week (through Friday’s close), and year to date:
Need to sign up for this e-newsletter? We offer free and paid subscription plans:
The Charlotte Ledger is an e-newsletter and website publishing timely, informative, and interesting local business-y news and analysis Mondays, Wednesdays, Fridays and Saturdays, except holidays and as noted. We strive for fairness and accuracy and will correct all known errors. The content reflects the independent editorial judgment of The Charlotte Ledger. Any advertising, paid marketing, or sponsored content will be clearly labeled.
Got a news tip? Think we missed something? Drop us a line at editor@cltledger.com and let us know.
Like what we are doing? Feel free to forward this along and to tell a friend.
Searchable archives available at https://charlotteledger.substack.com/archive.
Social media: On Facebook, Instagram, Twitter and LinkedIn.
Nab an “Essential Charlotte Ledger” T-shirt or hoodie.
Sponsorship information: email editor@cltledger.com.
Executive editor: Tony Mecia; Managing editor: Cristina Bolling; Contributing editor: Tim Whitmire, CXN Advisory; Reporting intern: David Griffith; TikTok consultant: Caroline Mecia