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                                                                   EXHIBIT 10.37


                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT


         AMENDMENT to an Employment Agreement by and between BRUNO'S, INC., an
Alabama corporation (the "Company"), and JAMES A. DEMME ("Executive") dated
September 19, 1997 and amended January 31, 1998 (the "Employment Agreement"),
made and effective this 22nd day of July 1998, by and between the Company and
the Executive.

         1. Section 2 of the Employment Agreement is amended to read as follows:

            2.  Term of Employment. Executive's term of employment under this
                Agreement shall commence as soon as possible after September 19,
                1997, but in any event no later than October 1, 1997 and,
                subject to the terms hereof, shall terminate on January 31,
                2000; provided, however, that Executive's term of employment
                shall be automatically renewed for a two-year term on February
                1, 2000 and on each successive second anniversary thereof (the
                "Term"), unless the Company has notified the Executive in
                writing within the 90 day period prior to the expiration of the
                then Term that such Term shall not be so renewed; provided,
                further, however, that any termination of employment by
                Executive (other than for death, Permanent Disability or Good
                Reason) may only be made upon 90 days prior written notice to
                the Company, and any termination of employment by Executive for
                Good Reason may only be made upon 60 days prior written notice
                to the Company.


         2. Subsection (a) of Section 6.1 of the Employment Agreement is amended
to read as follows:

            6.1 Termination Not for Cause or for Good Reason. (a) If Executive's
                employment is terminated by the Company other than for Cause (as
                defined in Section 6.4 hereof) or as a result of Executive's
                death or Permanent Disability (as defined in Section 6.2 hereof)
                or if Executive terminates his employment for Good Reason (as
                defined in Section 6.1 (c) hereof), Executive shall receive such
                payments, if any, under applicable plans or programs, including
                but not limited to those referred to in Section 3.4 and 4.1
                hereof, to which he is entitled pursuant to the terms of such
                plans or programs. In addition, Executive shall be entitled to
                receive an amount (the "Termination Amount") in lieu of any
                Bonus under the Company's Corporate Management Incentive Plan in
                respect of all or any portion of the fiscal year in which such
                termination occurs and any other cash compensation (other than
                the Vacation Payment and the 




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            Compensation Payment, as defined below), which Termination Amount
            shall be payable in twenty-four monthly installments at the
            beginning of each month following such termination of employment.
            The Termination Amount shall consist of an amount equal to the
            remaining Base Salary owed by Company to Executive for the balance
            of the then Term (the "Remaining Base Salary") plus two times the
            sum of the Executive's annual Base Salary plus Target Bonus under
            the Company's Corporate Management Incentive Plan, as in effect
            immediately prior to the event giving rise to such termination. In
            addition, Executive shall be entitled to receive a cash lump sum
            payment in respect of accrued but unused vacation days (the
            "Vacation Payment") and to compensation earned but not yet paid
            (including Base Salary and any deferred Bonus payments) (the
            "Compensation Payment"), and to continued coverage for 24 months
            under any employee medical, disability and life insurance plans in
            accordance with the respective terms thereof. Any period of
            continued coverage under the Company's medical plans shall not be
            credited against 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.

         3. Section 8 of the Employment Agreement is amended to read as follows:

            8. Mitigation of Damages. Executive shall use his reasonable best
               efforts to obtain comparable employment to mitigate damages or
               the amount of any payment provided for under this Agreement. Any
               such damages or the amount of any payment provided for under this
               Agreement shall not be subject to offset or any other reduction
               by reason of Executive's obtaining other employment, whether from
               self-employment, as a common-law employee, or otherwise, except
               that base salary paid to Executive by a subsequent employer in
               the last 12 months of the severance period shall be used to
               offset the unpaid portion of the Termination Amount.


                                       BRUNO'S, INC.


                                       By:   /s/  Walter M. Grant
                                             --------------------------
                                             Walter M. Grant
                                             Senior Vice President

                                       EXECUTIVE

                                       By:   /s/  James A. Demme
                                             --------------------------
                                             James A. Demme



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