The company cited tough times during the recession and millions of dollars needed for refurbishment.
In a surprise announcement yesterday, Hellaby Meats (SI) Ltd chief executive Mike Barnett said the decision to close the store was "a hard call not made lightly", but was done "in order to consolidate and stabilise" overall business operations, which employ almost 300 people elsewhere.
"Over the last few years, we have all worked hard to cut costs from the business and turn it around. However, tough economic times, along with the site needing major refurbishment that would have cost millions of dollars, has meant the operation is no longer a viable business," he said.
The butchery was 60% retail and 40% food services and customers had the option to be supplied from Christchurch in future, but freight expenses would be incurred, he said.
All 18 staff being made redundant would receive their full entitlements, including holiday and any redundancy payments and help to access services such as financial advice, CV preparation and meetings with Winz.
The parent company, which has traded in various forms for 76 years, also operates four fresh food retail outlets under the Raeward Fresh umbrella in Christchurch and Nelson, employing 298 people.
None of those outlets was affected, Mr Barnett said.
A multimillion-dollar Princes St "fresh food market" redevelopment was announced in September last year, after Hellaby bought for an undisclosed sum a site including the Southern Sports Bar and Grill and the adjacent Auto Court premises.
Dunedin City Council consent for the project has been granted.
That proposal had now been put on hold for at least two years, the properties being "land-banked" and left tenanted, Mr Barnett said.
The Kaikorai site would be put up for sale by the end of the month.
"Our original thinking was we would be able to remain open at Kaikorai Valley until the new store was established, with staff transferring. However, this is now not an option,' he said.
The Kaikorai site required "millions of dollars" to be invested in building refurbishment, machinery and technology, which could not be justified, given that the company intended to move all manufacturing to the Princes St site, he said.
"We had originally planned to open the new store and trade both entities separately. [However] They are completely different retail models and decisions about the two locations can't really be compared," Mr Barnett said.
On the question of selling the Princes St properties to keep Kaikorai open, Mr Barnett said while Princes St was ideal for a "full-scale fresh food market concept", there was not enough room at Kaikorai Valley for that type of model.
"If it [Kaikorai] was viable, we would have used it," he said.
The Princes St redevelopment, which would have employed 40 people, was suspended because Mr Barnett did not expect the retail trading environment to pick up for the next eight to 12 months.
"We want to be sure that we are coming out of the economic downturn before we proceed with any large scale development," he said.
