Specialty Grocer Earth Fare to Close All Stores and Liquidate Inventory, Files for Chapter 11 Bankruptcy
ASHEVILLE, N.C. — Earth Fare, a privately held grocery chain that sells natural and organic products, says it will shutter all of its stores and launch a liquidation inventory sale. The grocer lists 46 stores on its website, the bulk of which are in Florida and its home state of North Carolina. Earth Fare also has five stores in the Midwest and a few others in Alabama, Georgia, Tennessee, Virginia and South Carolina.
Earth Fare is also shuttering its corporate office in Asheville.
The Wall Street Journal reported that Earth Fare, whose majority investor is New York-based private equity firm Oak Hill Capital, filed for Chapter 11 bankruptcy protection today in Delaware. Oak Hill’s portfolio includes a stake in drive-thru fast food restaurant chain Checkers among other businesses. Past investments for Oak Hill include stakes in retailers Dave & Buster’s and Duane Reade.
Earth Fare’s investors include an affiliate of Monitor Clipper Partners and former Sears CEO Alan Lacy, according to the Journal.
In a statement released Monday, Earth Fare cited financial challenges stemming from its expansion efforts and its investments in improving the customer experience.
“While many of these initiatives improved the business, continued challenges in the retail industry impeded the company’s progress as well as its ability to refinance its debt,” the press release stated. “As a result, Earth Fare is not in a financial position to continue to operate on a go-forward basis.”
In addition to financial hardships, competition from other grocers played a “large role” in the downfall of Earth Fare, which has been in operation since 1975, according to David Beitz, co-founder and partner of Columbia, S.C.-based Beitz and Daigh Geographics, which tracks the grocery sector.
“Most of Earth Fare’s locations are near a Whole Foods, Trader Joe’s, Sprouts and/or a Fresh Market,” says Beitz, whose firm operates an online platform called Planned Grocery. The app maps the real estate locations of all grocery stores in the planning, development and operating phases.
“There are only a certain amount of dollars in the market and those dollars will be divided by the number of stores in the market based on customer purchases,” says Beitz. “Earth Fare’s problems were more about the competition since their locations are generally in good places with high traffic and good visibility.”
Earth Fare is not the only grocer shuttering stores and filing for Chapter 11 protection. Lucky’s Market, a Colorado-based chain, announced in late January the company was closing 32 of its 39 stores.
Beitz says that the grocery brands that are actively expanding and thriving are the ones that place a high value on “product, customer experience and pricing.” He says the real winners of the proverbial grocery wars will be the ones that can figure out how to effectively marry delivery with the in-store experience.
“Grocery retailers that make it easy for customers to make the shift to delivery and online shopping will be the winners,” predicts Beitz. “People are going to buy food regardless. It’s up to good operators to get them in the store or get them ordering online.”
Earth Fare is encouraging shoppers to take advantage of discounted merchandise as part of its liquidation, which includes store fixtures. The company says it is also pursuing potential suitors to backfill its locations.
— John Nelson