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The New York Post reports that Fairway Market, which started life as a fruit-and-vegetable stand during the Great Depression and evolved into one of New York's iconic food retail names, is "on the verge" of filing for bankruptcy for a second time … with some speculating that it could be looking at liquidation.

The company has been in the process of closing some of the suburban New York-area stores, and the Post says that it "may even lose its flagship store on Broadway and West 74th Street as competitors, including ShopRite, have toured the store with an interest in acquiring the real estate."

Here's how the Post describes the company's seemingly relentless decline:

"Fairway’s downturn started in 2007 when the Glickberg family sold an 80% stake to private equity firm Sterling Investment for $140 million. Four generations of the family had owned and operated a handful of Fairways in NYC, starting with a fruit-and-vegetable stand that opened in 1933.

"Fairway quickly fell victim to Sterling’s aggressive expansion plan aimed at enticing suburban shoppers, which only served to burden the company with a crushing $300 million in debt. Sterling took Fairway public in 2013 and worked to transform the local city grocer into a national chain with 300 stores, including many in the burbs … It was bought out of bankruptcy by an investment arm of Blackstone, GSO Capital, which recently sold its stake.

"Now owned by lead shareholders Brigade Capital Management and Goldman Sachs Group, Fairway is quietly closing stores with the most recent shuttering in Nanuet, New York — a 65,000-square-foot store that closed in September. Sources say another two stores in New Jersey — in Paramus and Woodland Park — are likely next on the chopping block. Half of its 14 stores — and the ones struggling the most — are in the suburbs of Long Island, Connecticut and New Jersey, sources said."

A major component of Fairway's problem, the story says, is that it has close to $175 million in debt that matures in just a few years. The other component of its problem - the fact that so many of its stores are struggling - makes it unlikely, maybe impossible, for it to meet those debt obligations. Sources tell the Post that the moves it is making now likely presage an eventual liquidation sale, since there is little evidence that it is able to turn things around.
KC's View:
As usual, I'm more interested in the second part of the problem - the strategic and tactical issues that plague the company - than the first.

Fairway started going downhill, it seems to me, almost from the moment that the Glickberg family sold it. I've never understood why the buyers didn't insist that the Glickbergs stick around to teach them about the business … the buyers never really seemed to understand the secret sauce that made Fairway special, but rather embarked on a horrible strategy of diluting that sauce and adding all sort of ingredients that in some ways made in unrecognizable.

By the way … it is emblematic of Fairway's lack of focus on its brand equity that it is using Instacart to make its deliveries. There are few faster ways to enable the erosion of your brand than making a deal with Instacart and allowing people to think that they are shopping there rather than with you.

It would be a shame if Fairway went away, but if it happens, it will be suicide. Not homicide.