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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended January 1, 2005

or

For the transition period from             to             

Commission file number 1-00041

SAFEWAY INC.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (925) 467-3000

Securities registered pursuant to Section 12(b) of the Act:

(Cover continued on following page)

(Cover continued from previous page)

Securities registered pursuant to Section 12(g) of the Act:

(Title of Class)

NONE

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x.

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked for price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter. Aggregate market value of the voting stock held by non-affiliates of Registrant as of June 19, 2004 was approximately $10.8 billion.

As of March 11, 2005 there were issued and outstanding 447.8 million shares of the Registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference to the extent specified herein:

SAFEWAY INC. AND SUBSIDIARIES

PART I

Item 1. Business and Item 2. Properties

General:

Information appearing on pages 15 through 17 of the 2004 Annual Report to Stockholders of Safeway Inc. (“Safeway” or the “Company”) is incorporated herein by this reference.

Safeway was incorporated in the state of Delaware in July 1986 as SSI Holdings Corporation and, thereafter, its name was changed to Safeway Stores, Incorporated. In February 1990, the Company changed its name to Safeway Inc.

Safeway’s corporate website is located at www.safeway.com. You may access our SEC filings free of charge at our corporate website promptly after such material is electronically filed with, or furnished to, the SEC. We also maintain certain corporate governance documents on our website, including the Company’s Corporate Governance Guidelines, our Director Independence Standards, the Code of Business Conduct and Ethics for the Company’s corporate directors, officers and employees, and the charters for our Audit, Nominating and Corporate Governance, and Executive Compensation Committees. We will provide a copy of any such documents to any stockholder who requests it. We do not intend for information found on the Company’s website to be part of this document.

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SAFEWAY INC. AND SUBSIDIARIES

Item 1. Business and Item 2. Properties (continued)

Capital Expenditures:

Information appearing under the caption “Capital Expenditure Program” on pages 16 and 17 of the Company’s 2004 Annual Report to Stockholders is incorporated herein by this reference.

Safeway stores opened, remodels completed, stores acquired and stores closed during the last five years were as follows:

  Note A. Defined as store projects (other than maintenance) generally requiring expenditures in excess of $200,000.

Financial Information About Industry Segments:

Note M to the consolidated financial statements, included on page 50 of the Company’s 2004 Annual Report to Stockholders, is incorporated herein by this reference.

Trademarks:

Safeway has invested significantly in the development and protection of the “Safeway” name. The right to use the “Safeway” name is considered to be an important asset. Safeway also owns approximately 400 other trademarks registered or pending in the United States Patent and Trademark Office, including its product line names such as Safeway, Safeway SELECT, Rancher’s Reserve, Lucerne and Mrs. Wright’s, and the trademarks Pak’n Save Foods, Vons, Pavilions, Dominick’s, Carrs, Randalls, Tom Thumb and Genuardi’s Family Markets. Each trademark registration is for an initial period of 10 or 20 years, depending on its age, and is renewable for as long as the use of the trademark continues. Safeway considers certain of its trademarks to be of material importance to its business and actively defends and enforces such trademarks. Canada Safeway has also registered certain of its trademarks in Canada.

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SAFEWAY INC. AND SUBSIDIARIES

Item 1. Business and Item 2. Properties (continued)

Working Capital:

At year-end 2004, working capital consisted of $3.6 billion in current assets and $3.8 billion in current liabilities. Normal operating fluctuations in these substantial balances can result in changes to cash flow from operations presented in the consolidated statements of cash flows that are not necessarily indicative of long-term operating trends. There are no unusual industry practices or requirements relating to working capital items.

Competition:

Food retailing is intensely competitive. The number of competitors and the amount of competition experienced by Safeway’s stores varies by market area. The principal competitive factors that affect the Company’s business are location, quality, service, price and consumer loyalty to other brands and stores.

Local, regional and national food chains, as well as independent food stores and markets, comprise the Company’s principal competition. Safeway also faces substantial competition from convenience stores, liquor retailers, membership warehouse clubs, specialty retailers, supercenters, and large-scale drug and pharmaceutical chains. Safeway and its competitors engage in price competition which, from time to time, has adversely affected operating margins in many of the Company’s markets.

Raw Materials:

Various agricultural commodities constitute the principal raw materials used by the Company in the manufacture of its food products. Management believes that raw materials for its products are not in short supply, and all are readily available from a wide variety of independent suppliers.

Compliance with Environmental Laws:

The Company’s compliance with the federal, state, and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise related to the protection of the environment has not had and is not expected to have a material adverse effect upon the financial position or results of operations of the Company.

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SAFEWAY INC. AND SUBSIDIARIES

Item 1. Business and Item 2. Properties (continued)

Employees:

At year-end 2004, Safeway had more than 191,000 full and part-time employees. Approximately 77% of Safeway’s employees in the United States and Canada are covered by collective bargaining agreements negotiated with local unions affiliated with one of 10 different international unions. There are approximately 400 such agreements, typically having 3 year terms, with some agreements having terms of up to 5 years. Accordingly, Safeway renegotiates a significant number of these agreements every year.

During 2004, UFCW collective bargaining agreements covering approximately 51,000 employees in the Company’s Vons, Eastern, Phoenix and Seattle stores were ratified. In January and February 2005, contracts in Northern California and Las Vegas covering approximately 25,000 employees were ratified.

During the balance of 2005, UFCW collective bargaining agreements covering employees in the Company’s stores in Wyoming; in-store Bakery Workers agreements in California, Seattle and Portland; and Teamsters agreements covering employees in Safeway’s distribution centers in Southern California, Denver and Seattle come up for renewal. In addition, certain collective bargaining agreements covering Denver Division store employees which expired in 2004 and Dominick’s agreements which expired in 2003 and 2004 are in the process of being renegotiated.

Other Labor Matters:

On October 11, 2003, seven UFCW local unions struck the Company’s 289 stores in Southern California. Safeway estimates the overall cost of the strike reduced 2004 and 2003 earnings by $254.0 million after taxes ($0.57 per diluted share) and $102.9 million after taxes ($0.23 per diluted share), respectively. An agreement ending the strike was reached on February 26, 2004 and was ratified by the unions on February 28, 2004. Employees returned to work beginning March 5, 2004. Additional information concerning the strike is set forth under the caption “Strike Impact” on page 20 of the Company’s 2004 Annual Report to Stockholders and is incorporated herein by this reference.

Financial Information About Foreign and Domestic Operations and Export Sales:

Note M to the consolidated financial statements, included on page 50 of the Company’s 2004 Annual Report to Stockholders and incorporated herein by this reference, contains financial information by geographic area.

Item 3. Legal Proceedings

Information about legal proceedings appearing under the captions “Legal Matters” and “Furr’s and Homeland Charge” as reported in Note L to the consolidated financial statements on pages 49 and 50 of the Company’s 2004 Annual Report to Stockholders is incorporated herein by this reference.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the stockholders during the fourth quarter of 2004.

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SAFEWAY INC. AND SUBSIDIARIES

PART II

The Company’s common stock, $0.01 par value, is listed on the New York Stock Exchange. Information as to quarterly sales prices for the Company’s common stock appears in Note P to the consolidated financial statements on page 52 of the Company’s 2004 Annual Report to Stockholders and is incorporated herein by this reference. There were 20,397 stockholders of record as of March 11, 2005; however, approximately 97% of the Company’s outstanding stock is held in “street name” by depositories or nominees on behalf of beneficial holders. The closing price per share of common stock, as reported on the New York Stock Exchange Composite Tape, was $18.35 at the close of business on March 11, 2005.

Holders of common stock are entitled to receive dividends if, as, and when declared by the Board of Directors out of funds legally available therefor, subject to the dividend and liquidation rights of any preferred stock that may be issued. The Company has not paid dividends on common stock through 2004.

Issuer Purchases of Equity Securities

The following table contains information for shares repurchased during the fourth quarter of 2004.

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SAFEWAY INC. AND SUBSIDIARIES

Item 6. Selected Financial Data

The “Five-Year Summary Financial Information” included on pages 18 and 19 of the Company’s 2004 Annual Report to Stockholders is incorporated herein by this reference. The Five-Year Summary should be read in conjunction with the Company’s consolidated financial statements and accompanying notes incorporated by reference in Item 8, Financial Statements and Supplementary Data.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information appearing under the caption “Financial Review” on pages 20 through 28 and under the captions “Capital Expenditure Program” and “Market Risk from Financial Instruments” on pages 16 and 17 of the Company’s 2004 Annual Report to Stockholders is incorporated herein by this reference.

Information regarding the terms of outstanding indebtedness appearing in Note D to the consolidated financial statements on pages 41 and 42 of the Company’s 2004 Annual Report to Stockholders is incorporated herein by this reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Information appearing under the caption “Market Risk from Financial Instruments” on page 17 of the Company’s 2004 Annual Report to Stockholders is incorporated herein by this reference.

Item 8. Financial Statements and Supplementary Data

Pages 29 through 55 of the Company’s 2004 Annual Report to Stockholders, which include the consolidated financial statements and the Independent Auditors’ Reports as listed in Item 15(a)1 below, are incorporated herein by this reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures which, by their nature, can provide only reasonable assurance regarding management’s control objectives. Management, including the Company’s President and Chief Executive Officer along with the Company’s Chief Financial Officer, concluded that the Company’s disclosure controls and procedures are effective in reaching the level of reasonable assurance regarding management’s control objectives. The Company also has investments in certain unconsolidated entities, including Casa Ley. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities are necessarily more limited than those it maintains with respect to its consolidated subsidiaries.

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SAFEWAY INC. AND SUBSIDIARIES

Item 9A. Controls and Procedures (continued)

The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon the foregoing, as of January 1, 2005, the Company’s President and Chief Executive Officer along with the Company’s Chief Financial Officer, concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s Exchange Act reports. There has been no change during the Company’s fiscal quarter ended January 1, 2005 in the Company’s internal control over financial reporting that was identified in connection with the foregoing evaluation which has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management of Safeway Inc. has prepared an annual report on internal control over financial reporting. Management’s report, together with the attestation report of the independent registered public accounting firm, appears on pages 53 and 54 of the Company’s 2004 Annual Report to Stockholders and is incorporated herein by this reference.

Item 9B. Other Information

None.

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SAFEWAY INC. AND SUBSIDIARIES

PART III

Item 10. Directors and Executive Officers of the Registrant

Directors of the Company. Information on the nominees for election as Directors and the continuing Directors of the Company is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

Executive Officers of the Company. The names and ages of the current executive officers of the Company and their positions as of March 11, 2005, are set forth below. Unless otherwise indicated, each of the executive officers served in various managerial capacities with the Company over the past five years. None of the executive officers named below is related to any other executive officer or director by blood, marriage or adoption. Officers serve at the discretion of the Board of Directors.

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SAFEWAY INC. AND SUBSIDIARIES

Item 10. Directors and Executive Officers of the Registrant (continued)

Audit Committee Financial Expert. This information is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

Identification of the Audit Committee. This information is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

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SAFEWAY INC. AND SUBSIDIARIES

Item 10. Directors and Executive Officers of the Registrant (continued)

Compliance with Section 16(a) of the Exchange Act. The information called for is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

Code of Ethics. The Company has adopted a Code of Business Conduct and Ethics, which is posted on the Company’s website at www.safeway.com/investor_relations. The Code applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, controller and other persons who perform similar functions for the Company, in addition to the corporate directors and employees of the Company.

Item 11. Executive Compensation

The information called for by Item 11 is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year. Information appearing under the captions “Report of the Compensation Committee; Report of the Section 162(m) subcommittee”; “Report of the Audit Committee” and “Stock Performance Graph” to be included in the Company’s 2005 Proxy Statement is not incorporated herein by this reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information called for by Item 12 is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

Item 13. Certain Relationships and Related Transactions

Note K to the consolidated financial statements, included on page 48 of the Company’s 2004 Annual Report to Stockholders, is incorporated herein by this reference. The information called for by Item 13 is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

Item 14. Principal Accountant Fees and Services

The information called for by Item 14 is incorporated by reference from the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2004 fiscal year.

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SAFEWAY INC. AND SUBSIDIARIES

PART IV

Item 15. Exhibits, Financial Statement Schedules

Consolidated Statements of Operations for fiscal 2004, 2003, and 2002.

Consolidated Balance Sheets as of the end of fiscal 2004 and 2003.

Consolidated Statements of Cash Flows for fiscal 2004, 2003, and 2002.

Consolidated Statements of Stockholders’ Equity for fiscal 2004, 2003, and 2002.

Notes to Consolidated Financial Statements.

Reports of Independent Registered Public Accounting Firm.

None required.

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SAFEWAY INC. AND SUBSIDIARIES

Item 15. Exhibits, Financial Statement Schedules (continued)

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SAFEWAY INC. AND SUBSIDIARIES

Item 15. Exhibits, Financial Statement Schedules (continued)

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SAFEWAY INC. AND SUBSIDIARIES

Item 15. Exhibits, Financial Statement Schedules (continued)

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SAFEWAY INC. AND SUBSIDIARIES

Item 15. Exhibits, Financial Statement Schedules (continued)

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SAFEWAY INC. AND SUBSIDIARIES

Item 15. Exhibits, Financial Statement Schedules (continued)

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SAFEWAY INC. AND SUBSIDIARIES

Item 15. Exhibits, Financial Statement Schedules (continued)

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SAFEWAY INC. AND SUBSIDIARIES

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

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SAFEWAY INC. AND SUBSIDIARIES

Exhibit Index

LIST OF EXHIBITS FILED WITH FORM 10-K FOR THE PERIOD

ENDED January 1, 2005