Fairway Market, which declared bankruptcy last January and put its 14 stores up for sale, has sold eight of them.
Five of its New York stores (four in Manhattan, one in the suburb of Pelham) have been sold to Wakefern member Village Supermarket for $76 million, and one to Key Food member Seven Seas Georgetowne for $5 million, which have said they will run them as going concerns.
Village Supermarkets also acquired Fairway’s production and distribution center as part of its deal.
The real estate leases for two stores in New Jersey - in Paramus and Woodland Park - have been sold to Amazon for $1.5 million.
The announcement says that "Fairway Market continues to serve its communities by operating all of its stores, including stores not sold during the Court-supervised auction, and intends to do so for the foreseeable future to accommodate the current public need for our products."
The unsold stores are in Manhattan, Brooklyn, Queens, two on Long Island, and one in Stamford, Connecticut. The plan is for Fairway to continue operating them because of the pandemic that has created enormous demand and business for the units.
The New York Post writes that Amazon "submitted bids for four Fairway stores, including one in Westchester and one in Brooklyn … It’s unclear why half its bids fell through, but some sources speculate it might have had to do with Local 1500, which represents some 3,000 Fairway Market workers and fought hard against non-union bids."
One thing that is clear, the Post writes, "is that Amazon won’t be using the Jersey stores under the Fairway name - a right that was purchased by Village Supermarket, which operates ShopRite stores."
Scott Moses, Managing Director and Head of Food Retail & Restaurants Investment Banking at PJ Solomon, which was M&A investment banking advisor to Fairway, said in an email yesterday that "these Fairway stores and DC employ over 1,500 people, who have been doing heroic work responding to our local exigency during the ongoing crisis, clearly demonstrating the critical role our supermarkets play in communities all around the country."
Fairway started as a fruit and vegetable stand during the Great Depression, and grew into an iconic New York City presence, serving a number of its neighborhoods in a way that many residents found to be both irresistible and inimitable. But in 2007, when the founding Glickberg family sold an 80 percent stake in the company to a private equity group, things almost immediately went downhill, as the new owners focused on expansion (at one point considering a national growth strategy) without any of the marketing and merchandising savvy and panache that the founding family had mastered. It went public … then went bankrupt … then was bought out of bankruptcy … and then started closing some of the suburban stores that were the biggest drain on its operations and profits.
- KC's View:
I'm glad that Fairway has a future, albeit with different owners in different places … because those stores, even through mismanagement and hubris, have played important roles in their communities. Many of them were, in fact, essential - before "essential" became a term used in pandemic management.
The challenge remains, however, as it does for every food retailer. When the pandemic ends … whether in two months or six months or 12 months or 18 months … these stores must find new ways to be essential to their customers.
How are we to be essential? This needs to be the question that every retailer asks itself … with the knowledge that it has to be asked every day, and that tomorrow's answers may be different than today's.