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                                                                   EXHIBIT 10.35


                                  BRUNO'S, INC.
                                 SEVERANCE PLAN


1.       Eligibility. Employees of Bruno's, Inc. ("Company") shall be eligible
         to participate in the Bruno's, Inc. Severance Plan ("Plan"). The
         Company currently anticipates that coverage under the Plan will extend
         to 16 senior vice presidents and vice presidents, 17 directors and 77
         salaried, non-contract employees, as more specifically designated in
         writing from time to time by the Chief Executive Officer of the
         Company. Any increase in the aggregate number of employees
         participating in the Plan shall be approved by the statutory committee
         of unsecured creditors (the "Creditors' Committee") appointed in
         chapter 11 cases of the Company and its affiliates. If the Company and
         the Creditors' Committee fail to agree upon an increase in the number
         of participants, such dispute shall be submitted to the United States
         Bankruptcy Court for the District of Delaware ("Bankruptcy Court") for
         determination.

2.       Termination of Participation. Participation in the Plan automatically
         terminates, without notice to or consent of any participant, upon such
         participant's death, disability, resignation without Good Reason (as
         defined below) or termination for Cause (as defined below).

         "Good Reason" means any of the following events with respect to a
         participant:

         -        any reduction in his or her base salary, target bonus
                  opportunity or, except for changes applicable to all similarly
                  situated employees, employee benefits; provided, however, that
                  the expiration of the Bruno's, Inc. Retention Plan in
                  accordance with its terms shall not constitute Good Reason;

         -        any material change in duties, the result of which is that a
                  substantial portion of such changed duties is inconsistent
                  with such participant's education, experience or training
                  (except in connection with a termination for Cause,
                  resignation for Good Reason or disability); or

         -        any change in his or her principal work location of more than
                  the greater of fifty (50) miles and the covered employee's
                  current distance traveled

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                  to his or her principal work location as of the date upon
                  which the Bankruptcy Court enters an order approving the Plan
                  ("Effective Date");

         "Cause" means any act or any failure to act on the part of a
         participant which constitutes:

         -        willful malfeasance or willful misconduct in connection with
                  his or her employment which is injurious to the Company or any
                  of its affiliates or the Board of Directors of the Company or
                  any of its affiliates, including fraud, embezzlement, theft,
                  dishonesty and property damage;

         -        willful or grossly negligent material violation of law in
                  connection with or in the course of his or her duties or
                  employment with the Company or any of its affiliates;

         -        misdemeanor involving moral turpitude or felony for which the
                  participant is convicted or pleads nolo contendere;

         -        willful or grossly negligent engagement in any activity
                  competitive with the business of the Company as to which the
                  Company has notified the participant in writing and the
                  participant has not ceased within three (3) business days
                  following such notice;

         -        failure to follow reasonable directions or instructions of a
                  more senior officer or the Board of Directors of the Company
                  as to which the Company has notified the participant in
                  writing and such failure shall have continued for a period of
                  three (3) business days after receipt of such notice;

         -        willful or grossly negligent breach of any stated material
                  employment policy of the Company; or

         -        willful and wrongful disclosure of confidential information of
                  the Company or any of its affiliates.

         No act or failure to act on the part of a participant shall be deemed
         to be "willful" if it was due primarily to an error in judgment or
         negligence.

3.       Severance Benefits. Subject to Section 4, if any participant is
         terminated by the Company without Cause or resigns for Good Reason
         during a period commencing three (3) months before a Change in Control
         (as defined below) and ending twelve (12) months following a Change in
         Control (as defined below), such participant (provided that such
         participant shall execute a release


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         with respect to the Company substantially in the form annexed hereto)
         will be entitled to (i) severance pay equal to his or her monthly pay
         rate in effect on the termination date multiplied by the applicable
         period set forth on Schedule 1, and (ii) continuation of group medical
         and life insurance benefits as in effect from time to time for such
         period. The Company shall make severance payments in satisfaction of a
         participant's severance pay in accordance with the Company's normal
         payroll practices in existence as of the date the participant is
         severed, rather than in a lump sum.

         Severance pay shall not be reduced by any remuneration received by a
         severed employee from another employer within the four and one-half (4
         1/2) month period subsequent to termination. Severance benefits earned
         or payable to a severed employee after such four and one-half (4 1/2)
         month period, shall be reduced by any remuneration received or earned
         by the employee from another employer during the balance of the period
         during which severance benefits are payable. Group medical and life
         insurance coverage shall be limited to the extent that a participant
         becomes covered by the group medical and life insurance plans of a
         successor employer. Any period of group medical coverage pursuant to
         the Plan shall not reduce any required period of coverage for purposes
         of Part 6, Subtitle B, Title I of the Employment Retirement Income
         Security Act of 1974, as amended ("ERISA").

         "Change in Control" means any of the following events:

         -        the approval by the Board of Directors of the Company of a
                  plan of liquidation with respect to the Company, including the
                  approval of a sale of a significant number of the Company's
                  stores in contemplation of additional sales of stores
                  constituting substantially all of the Company's stores in the
                  aggregate;

         -        the sale or other divestiture of all or substantially all of
                  the assets (excluding the sale of inventory or other assets in
                  the ordinary course of business) of the Company or of the
                  Company and its direct or indirect majority-owned
                  subsidiaries; or

         -        the acquisition by any person or affiliated group of persons
                  of the common stock of the Company pursuant to a plan of
                  reorganization or otherwise such that said person or
                  affiliated group shall own directly or indirectly,
                  beneficially or of record, a majority of the outstanding
                  voting stock of the Company; provided, however, that the
                  acquisition of a majority of the outstanding voting stock of
                  the Company in accordance with a plan of reorganization of the
                  Company by an entity that is a creditor of the Company (other
                  than a creditor engaged in the wholesale


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                  or retail sale or distribution of groceries or other food
                  products) shall not be deemed a Change in Control;

         -        the appointment of a trustee for the Company or the conversion
                  of the Company's case under chapter 11 of title 11 of the
                  United States Code ("Bankruptcy Code") to a liquidation case
                  under chapter 7 of the Bankruptcy Code.

4.       Sale of Company Assets. A participant whose employment is terminated by
         the Company as a result of a sale or other divestiture of any assets of
         the Company shall not be eligible for severance benefits under the Plan
         if (i) such participant is offered employment at the same position and
         with the same base salary, same target bonus opportunity, and same
         employee benefits (as are made available to similarly situated
         employees) at a work location within the greater of fifty (50) miles
         and the distance traveled to his or her principal work location with
         respect to the Company, and (ii) such participant will be eligible for
         coverage under a severance plan providing severance benefits identical
         to those provided under the Plan if he or she is terminated without
         Cause or resigns for Good Reason within the first twelve (12) months of
         such employment.

5.       Plan Administration. The Company (EIN 63-0411801) is the plan sponsor
         and plan administrator. Service of legal process upon the Plan shall be
         made upon the Company as follows:

                  Bruno's, Inc.
                  800 Lakeshore Parkway
                  Birmingham, Alabama 35211
                  Attn:  General Counsel

         The Company has full power and authority to do all things necessary or
         convenient to administer and effect the purposes of the Plan, whether
         or not such powers are set forth herein, including but not limited to
         the power to:

         (a)      provide rules for the management, operation and administration
                  of the Plan;

         (b)      reasonably construe and make all determinations under the Plan
                  in good faith to the fullest extent permitted by law;

         (c)      correct any defect, supply any omission, or reconcile any
                  inconsistency in the Plan in such manner and to such extent as
                  it shall deem appropriate in its sole discretion to carry the
                  same into effect; and



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         (d)      make reasonable determinations as to a participant's
                  eligibility for benefits under the Plan, including
                  determinations as to Cause and Good Reason.

         The decisions of the Company or its delegate shall be final and
         conclusive for all purposes of the Plan and shall not be subject to any
         appeal or review other than pursuant to Sections 6 and 7.

6.       Claims Procedure; Claims Review Procedure. If any participant has a
         claim for benefits which are not being paid, such claimant may file
         with the Company a written claim setting forth the amount and nature of
         the claim, supporting facts, and the claimant's address. The Company
         shall notify each claimant of its decision in writing by registered or
         certified mail within thirty (30) days after its receipt of a claim,
         unless otherwise agreed by the claimant. If a claim is denied, the
         written notice of denial shall set forth the reasons for such denial,
         refer to pertinent Plan provisions on which the denial is based,
         describe any additional material or information necessary for the
         claimant to realize the claim, and explain the claim review procedure
         under the Plan.

         A claimant whose claim has been denied or such claimant's duly
         authorized representative may file, within sixty (60) days after notice
         of such denial is received by the claimant, a written request for
         review of such claim by the Company. If a request is so filed, the
         Company shall review the claim and notify the claimant in writing of
         its decision within thirty (30) days after receipt of such request,
         which may be extended for up to thirty (30) additional days in special
         circumstances as determined by the Company in its sole discretion. The
         notice of the final decision of the Company shall include the reasons
         for its decision and specific references to the Plan provisions on
         which the decision is based. The decision of the Company shall be final
         and binding on all parties.

7.       Disputes. Any dispute by a participant concerning his or her benefits
         under the Plan following a final decision by the Company pursuant to
         Section 6 arising during the pendency of the Company's case under
         chapter 11 of the Bankruptcy Code shall be resolved by the Bankruptcy
         Court, and any such dispute arising thereafter shall be settled in
         accordance with the Rules of the American Arbitration Association,
         which determination shall be binding upon the parties conclusively.

8.       ERISA Rights. A participant may obtain copies of all Plan information
         upon written request to the plan administrator. The plan administrator
         and others who operate the Plan must do so prudently and in the
         interest of the participants. No employer or other person may terminate
         or otherwise discriminate against a participant in any way intended to
         prevent him or her


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         from obtaining a severance benefit or exercising his or her rights
         under ERISA. If such discrimination occurs, the participant may seek
         assistance from the United States Department of Labor or may file suit
         in a federal court.

         A participant is entitled to receive a written explanation of the
         reasons for the denial of his or her claim, and to have the Company
         review and reconsider such claim. The participant may file suit in a
         state or federal court to challenge any such denial.

         Under ERISA, there are steps a participant can take to enforce the
         above rights. For instance, if materials are requested from the Plan
         and are not received within thirty (30) days, the participant may file
         suit in a federal court. If a participant has any questions about the
         Plan, the participant may contact the plan administrator. If a
         participant has any questions about this statement or about his or her
         rights under ERISA, the participant may contact the nearest Area Office
         of the United States Labor-Management Services Administration,
         Department of Labor.

9.       Amendment or Termination. The Plan is subject to approval by the
         Bankruptcy Court. The Plan may be amended or terminated by the Company
         in its sole discretion; provided, however, that the Plan cannot be
         amended or terminated (i) within three (3) months preceding a Change in
         Control or within twelve (12) months following a Change in Control in
         any manner which adversely affects the rights of any participant at
         that time or (ii) during the pendency of the Company's case under
         chapter 11 of the Bankruptcy Code, without the approval of the
         Bankruptcy Court.

10.      No Employment Rights. No participant has any right to be employed by
         the Company by reason of the establishment or any provisions of the
         Plan, and the Company reserves the right to dismiss or otherwise deal
         with any employee to the same extent as though the Plan had not been
         adopted.

11.      Non-Property Interest. The Plan is unfunded and all benefits under the
         Plan are unsecured claims against the Company. The Plan shall not
         affect or impair the rights or obligations of the Company or a
         participant under any other written plan, contract or arrangement.

12.      Transferability of Rights. No participant may assign, transfer or
         otherwise alienate his or her rights under the Plan.



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13.      Governing Law. The Plan shall be construed, administered, and enforced
         according to the laws of the State of Alabama, except to the extent
         that such laws are preempted by the federal laws of the United States
         of America.




EXECUTED, at Birmingham, Alabama, this 3rd day of June, 1998.


                                             BRUNO'S, INC.



                                             By: /s/ James A. Demme
                                                 -----------------------
                                                 James A. Demme
                                                 Chief Executive Officer




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                                                                   SCHEDULE 1 TO
                                                    BRUNO'S, INC. SEVERANCE PLAN


<TABLE>
<CAPTION>
Position                                    Severance Period
--------                                    ----------------
<S>                                         <C>      
Senior VP                                    12 months
VP                                           12 months
Director                                      6 months
Other salaried employee                       3 months
</TABLE>





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