Is Beloved NYC Grocery Store ‘Fairway’ Really Closing?
First, there was Barneys New York, whose liquidation continues after an August filing.
Now, yet another Jewish-born dynasty might shut its doors: Fairway has reportedly filed for Chapter 7 bankruptcy and closing its 14 New York-area stores, according to a scoop by The New York Post.
Fairway issued a statement denying the report. “Fairway Market has no intention to file for chapter 7 or liquidate all of its stores,” the company representative said. “Such statements are categorically untrue and disappointing. Fairway has been engaged in a strategic process and expects to soon announce a value maximizing transaction that will provide for the ongoing operations of stores. Our lenders remain extremely supportive of our efforts. All 14 stores remain open for business, offering a complete range of high quality, specialty food products, and we look forward to seeing our customers and employees.”
But the Post, in an updated story, said that Village Super Market, the publicly held owner of ShopRite, has expressed interest in acquiring a handful of Fairway stores and keeping the name.
“Village Super Market is very well capitalized and they are successful in the suburbs,” a source told the Post. “There are no ShopRites in Manhattan,” this person said of the firm, which did not respond for comment.
If confirmed, it would be the second bankruptcy proceeding for Fairway, which filed Chapter 11 in 2016. But Chapter 7 “means the grocery chain does not currently have a plan to continue to exist,” the Post explained.
At one point in the last decade, Fairway posted about $764 million in revenue and employed 900 people, according to company-info site Owler. While the company had made efforts to beef up e-commerce and mobile shopping, it also fought for relevance as mega-chains like Wegman’s, Trader Joe’s, and Amazon-owned Whole Foods grew.
“They grew too fast, and bit off more than they could chew,” Bridget Goldschmidt, managing editor of industry news source Progressive Grocer, told the Forward. “They weren’t sufficiently heedful of competition from Wegman’s and others entering the fray. Fairway had also cornered the market on experiential, treasure-hunt shopping. Now not so much.”
The rise of e-commerce “also lessened that as a selling point for grocers. They have to compete with whole convenience aspect,” Goldschmidt said.
According to Fairway’s website, Nathan Glickberg founded the store “as a small, corner, fruit & veggie stand” on the Upper West Side in 1933. In 1954, Glickberg’s son Leo joined the business, growing it into a full-line grocery. “At Leo’s wife’s suggestion, the store was named Fairway, after a business her father used to own. They called it a ‘lucky name.’”
For a while, it was. Nathan Glickberg’s grandson, Howie, inherited the store in 1974. By that time, it had become a kind of village market for Upper West Siders, who relished its crowded aisles, sawdust-covered floor, selections of cheeses and produce, and relatively low prices.
Howie Glickberg grew Fairway into a citywide chain. But his ambition may have also planted the seeds for Fairway’s demise; an initial public offering in 2013 proved disastrous.
As the Forward reported in 2016, Fairway was purchased in a 2007 leveraged buyout by Sterling Investment Partners, a private equity firm. When Sterling took Fairway public, it was carrying $250 million in debt, much of it left over from the buyout. Despite an initial price surge, the IPO was a bust, and company’s financial results have been disastrous in recent years, the Forward reported then. Debt service drained the company’s revenues.
But Fairway CEO Abel Porter told media outlets that the company had survived those tough times. “We’ve moved dramatically quickly to be able to compete,” Porter said in a November 2018 interview with Bloomberg. “We’re not burning cash, we’re accumulating cash.”
But industry insiders suggest otherwise. “Many have their doubts about whether a small ‘David’-like grocery can compete with not just one Goliath, but a slew of them setting up camp in its hometown,” trade publication PYMNTS.com wrote in January 2019.
Despite the doom and gloom, specialty supermarkets — like kosher groceries — should have hope, even in a crowded market, Progressive Grocer’s Goldschmidt told the Forward. “Those stores are succeeding in urban areas with large, concentrated populations with special dietary needs who are insistent on keeping up those traditions,” she said. “Someone who keeps kosher won’t give up kosher meat because meat is cheaper somewhere else. And there are people for whom a mainstream grocery’s kosher section will never be enough.”
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