Fairway Market in Red Hook via Cindy Day/Flickr
Though they once had ambitious plans to expand beyond New York City, Fairway Group Holdings Corp. is struggling with debt instead, reports Bloomberg Business. The company has incurred massive debt in order to finance its expansion plans and is in danger of default, according to analyst reports, and its “capital structure remains unsustainable.” In addition to putting the brakes on expansion plans, the company has been advised to close some stores outside New York.
Known for quality produce and well-curated private brands, Fairway Market stores are seen as perhaps the most representative of New York City when conversations turn to regional grocery loyalties. The gourmet grocery’s original store at 74th and Broadway on the Upper West Side, with its cramped-and-bustling atmosphere, is a cult favorite for Manhattanites. The 52,000-square-foot Red Hook location in an historic coffee warehouse, opened in 2006, is credited in part with anchoring that neighborhood’s renaissance.
The Upper West Side store attracted shoppers in search of unusual gourmet items and good prices, a rare combination associated with the Fairway brand. But with the increasing presence of mega chain Whole Foods (with their selection of local items and efforts to provide lower-priced alternatives), discount grocery chains like Trader Joe’s and Costco (which carry high-quality grocery offerings), and “mainstream” groceries like Key Food (now stocking many of the gourmet items that used to be found only in specialty stores), it may be hard to compete, much less expand.
A “victim of timing,” the company went public three years ago just as those national chains were ramping up aggressive efforts to capture the New York City market. Fairway has not reported a profitable quarter since its initial public offering and posted a $9.7 million loss in the last quarter of 2015, in addition to the company’s stock price falling 93 percent in the last year.
It may be worth noting that grocery chain Wegmans, slated to arrive in the Brooklyn Navy Yard (admittedly an area starved for healthy grocery options) in 2018, is a similar regional cult favorite. Will the popular newcomer be able to crack the competitive NYC market?
[Via Bloomberg Business]
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