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For more than 85 years, the Budwey’s chain of grocery stores has been a fixture in the lives of Northtowns families who depend on it for its Old World Sausage Shop, doughnuts made from scratch and neighborhood-feel.

But not for much longer.

Frank Budwey said Tuesday he has agreed to sell his three supermarkets in the Buffalo Niagara region to the Olean Wholesale Grocery Cooperative in a deal that will bring an end to the family’s long involvement in the local grocery business. While the original North Tonawanda location will remain under the Budwey’s banner, Olean Wholesale is expected to sell Budwey’s store on Kenmore Avenue to Dash’s Markets, according to industry sources. The fate of the Newfane store is uncertain.

Budwey in 2002 joined the cooperative, which allowed him to own shares of its warehouse and “cut out the middleman.”

“They’re the key to our success besides our customers and our staff,” Budwey said of that decision Tuesday in his North Tonawanda office. “Without my great staff of employees, I would’ve never been able to manage three stores and be in business all these years. I have employees that have been with me over 30 years.”

To quell rumors about the company’s direction, Budwey late last week announced the planned deal to employees. A condition of the deal is that Olean Wholesale retain the stores’ roughly 430 employees, Budwey said.

Loyal customer Marilyn Gruttadauria, of Buffalo, was talking about the news Tuesday with butcher Tommy Magaddino, maker of Budwey’s famous chorizo, Buffalo hot wing and spinach and feta sausages.

“I just heard that this was going to be taken over by Dash’s,” she said while shopping at the Kenmore Avenue location. “I like Dash’s, too, but I feel bad that Budwey’s will be gone. I like it the way it is.”

Joseph Dash, the owner of Dash’s Markets, could not be reached to comment.

The deal, which is expected to close by the end of the year, will end the Budwey family’s ties to the local grocery market that saw the small North Tonawanda store grow to a total of three markets and outlast national chains from A&P to Loblaws to Bells and Super Duper.

“It’s the end of an iconic story of a very successful independently owned and operated entrepreneurial family, between Frank and his mom running the stores for about 50 years and having success against two of the more successful chains expanding in Western New York in Tops and Wegmans,” said Burt Flickinger III, a supermarket industry expert and managing director at Strategic Resource Group.

The end of an era came as a surprise to some longtime customers, too.

“It’s a name that I recognize, that I sort of grew up with,” North Tonawanda native Mike Tokarczyk said Tuesday. “It was just surprising.”

Budwey got his start at the family’s original Division Street store, earning 50 cents an hour stacking glass bottle returns.

“It’s bittersweet,” Budwey said. “We’ve been here in North Tonawanda for 86 years. I grew up in the food business. I’ve worked in it since I was 10.”

But now, at age 64 and without an heir apparent in the family, he said it is time to sell.

“I’m going to be 65 next year and I didn’t have a succession plan, so this is my succession plan,” Budwey said. “I’ve been trying to sell for about two years now.”

Budwey on Tuesday looked back fondly on memories from his career in the business, including store Christmas parties and summer picnics in the 1970s that featured games of baseball and football at Ellicott Creek Park.

“My mother even played football – and we were playing tackle football,” he said. “That’s why I gave my mother the ball to run because nobody would tackle the boss.”

Budwey’s was founded in July 1922 by Frank Budwey’s grandmother, Saltonia, who opened a grocery store on Oliver Street in North Tonawanda. Frank’s father, James, took over the store in 1936 and moved it in 1943 to 393 Division St. in a 3,000-square-foot supermarket, which was a novelty at the time. James Budwey opened two other locations – in the City of Tonawanda and in Amherst. He died in 1952.

Frank’s mother, Flora, took over the chain of stores and consolidated down to only the Division Street store. Times became difficult for the family, which moved to Geneva Street in North Tonawanda.

“We moved from a very affluent neighborhood to a neighborhood where the train was right across the street and used to rock the house,” Budwey said.

He took over the store in 1971 after returning from military service in Vietnam and moved it to its current location in 1974.

During the next several decades, the store was part of the Super Duper and Bells chains before being sold to the Jubilee chain in 1995.

He bought the store back five years later to stave off its closing and ran it as a Jubilee for two years until the Budwey’s name returned in 2002. At that time, he also joined Olean Wholesale.

In 2005, Budwey’s opened the Kenmore Avenue store in North Buffalo and added the Newfane store in 2009, when it opened at the site of a former Shurfine store that had closed the year before. Over the years, Budwey became known for his record of community service by sponsoring Little League teams, the North Tonawanda High School’s “Move Up Day” and Variety Kids Telethon.

The sale comes at a time when Budwey’s, like all small grocery stores, is facing intensifying competition in a market that continues to shrink.

Aside from the major chains, from Tops to Wegmans, that dominate the local grocery market, major new players such as Walmart have joined the competition in recent years.

The battle for price-conscious shoppers has intensified with the expansion of chains such as Save-A-Lot and ALDI, along with the proliferation of deep-discount retailers, such as Dollar General, that carry a smattering of grocery items.

And at the high end, the entry of Trader Joe’s into the local market last week with the opening of an Amherst store, combined with the launch of Tops Market’s higher-end Orchard Fresh store in Orchard Park, expands choices for consumers looking for unique brands and products.

“The Buffalo market is very price-conscious,” said Arun Jain, a University at Buffalo marketing professor.

“It’s very difficult to compete in this marketplace,” he said. “I think it will become even tougher now with Trader Joe’s coming in.”

Budwey said his small chain survived by playing to its advantages, including independence, small floor plans and convenience. “I’ve had a very good management staff that thought the same way I did. They were independent thinkers and independent operators: Not being dictated to and being able to think outside the box and being able to bring in what you wanted to buy,” he said.

“If my meat guy got a good deal for strip loins, we were able to put it in there at that price, whereas maybe the supplier wouldn’t have been able to support an order for 50 or 100 stores,” he said.

It is those deals that bring in shoppers such as Betty Piazza to the Kenmore Avenue store.

“It’s convenient,” she said. “It has everything I need. They have great values on larger cuts of meat — large quantities.”

Some older customers, such as Erma Fleury of North Tonawanda, prefer Budwey’s smaller-sized stores compared to larger, overwhelming supermarkets in the area.

“I like the size of this store because I can get around and I know where everything is,” she said. “Get into the bigger stores and I get lost.”

Still, the vast purchasing power of big chains put Budwey’s at a disadvantage in an industry where profit margins are measured in pennies on the dollar.

“It’s become more and more difficult for a small chain to survive,” Jain said. “The volume is so little that the costs they bear are so much higher. They don’t have the volume of a Tops or a Wegmans or a Walmart.”

But going to Budwey’s might be more convenient for many shoppers, especially in a community like Newfane, where it’s the only major grocery store in town. And that can be a significant advantage, Jain said.

“The only advantage they have is if nobody is around them,” Jain said. “They may be very good for fill-in shopping, but for a major grocery shopping, they will go to the big chains.”

Budwey said he is in the process of finalizing the deal with Olean Wholesale, the Olean-based grocery wholesaler that supplies the stores. Olean Wholesale then is expected to seek a franchise operator to run the stores.

“They will take those three stores and they will try to sell them, franchise them out,” Budwey said

The deal has not closed and still must clear some final hurdles, including the signing of a definitive sales agreement and the arrangement of financing for the purchase by Olean Wholesale, which was founded in 1922 and supplies more than 100 stores throughout Western and Central New York, western Pennsylvania and northeastern Ohio from its 380,000-square-foot warehouse in Olean.

As a cooperative, the food distribution business is owned by the independent grocers it supplies. Its store-brand labels include the Shurfine brand, no-frills ShurSaving products and Western Family nonfood items.

Jim Ried, Olean Wholesale’s president and chief executive officer, declined to comment.

“It’s much too premature to say anything about it,” Ried said. “Maybe at a later date.”

“We have not done anything at this point,” he said Tuesday. I don’t have one signed piece of paper on anything at this point.”

Budwey, however, said he expects the sale to be completed by the end of the year, if not sooner.

“It could happen in three or four weeks, or it could be the end of the year,” he said.

Under the deal, Olean Wholesale would acquire the Budwey’s Market name and could continue to operate the stores under that banner.

“They realize we have a following, and they decided to keep the name,” Budwey said.

Budwey said he will continue to own the property where the grocery stores are located and will lease the sites to Olean Wholesale. He will be a consultant for the North Tonawanda store.

“I want to make sure the Budwey doughnuts don’t change,” he said.

email: drobinson@buffnews.com and jpopiolkowski@buffnews.com