Fresh & Easy, a struggling market purchased two years ago by billionaire supermarket magnate Ron Burkle, is preparing for its second bankruptcy filing in two years, according to Bloomberg.
“An application could come as soon as next week,” Bloomberg reported Thursday. The supermarket company could still find a buyer for all or part of the chain, a move that may forestall a filing.
A Fresh & Easy representative refuted Bloomberg’s report.
“Fresh & Easy has been in the process of restructuring since transitioning to new ownership two years ago, most recently closing a number of unprofitable stores,” said company spokesman Brendan Wonnacott. “The company has not made a decision relative to the use of court assistance in the restructuring process.”
Yucaipa Cos., an affiliate of Burkle’s investment firm, bought most of Fresh & Easy’s assets after it sought protection from creditors in 2013. The chain, created by British retail giant Tesco, filed for bankruptcy after losing millions of dollars on the American-born concept.
A representative for Yucaipa could not be reached for comment.
The Yucaipa purchase included 167 stores, as well as distribution and manufacturing facilities in Riverside. Stores that were not purchased were closed. Fresh & Easy is now down to 100 stores from a high of 200.
Led by former 7-Eleven executive James Keyes, Fresh & Easy launched a turnaround plan that called for stores to focus on convenience, low prices, ready-to-eat meals, wider selection of craft beer and more fresh foods.
Stores also expanded hours, with some open 24 hours.
One of the biggest changes was bringing back the defunct Wild Oats organic brand to store shelves. But the tweaks didn’t move the needle at some stores.
By 2014, Yucaipa began downsizing stores that were unprofitable. At least 69 markets have closed this year, including seven in Orange County.
Keyes has consistently declined to talk to the media about his plans for the chain. One idea that never came to fruition was designing a “Fresh & Easy store of the future.” The company had said it was working with a design firm used by Apple, but those plans have stalled.
Fresh & Easy’s lackluster results and seesaw marketing strategies have endured since Tesco launched the first store in 2007. At the time, the company promised low prices on natural and organic foods, takeout meals, and speedy self checkouts for time-pressed shoppers.
As the recession hit, Fresh & Easy made swift changes to adapt to Southern California shoppers who criticized the chain’s no-frills look and grocery selections. Pressured by investors, Tesco filed for bankruptcy and sold the chain to Yucaipa. Tesco invested about $1.6 billion in the venture before deciding to bail out.
Fresh & Easy’s woes have come as other newcomers to Southern California have come and gone.
In late 2013, Assi Natural Market closed less than a year after its much-publicized debut in Irvine. The chain had touted itself as an Asian version of Whole Foods Market. Virginia-based The Fresh Market pulled out of California this year. The European-inspired marketplace had one store open less than a year in Laguna Hills.
But the biggest failed venture has been Haggen.
Earlier this year, the Pacific Northwest grocer entered the fragmented Southern California grocery market after buying 146 Albertsons and Vons stores. Eleven of its 83 California locations were in Orange County.
The rapid expansion into uncharted territory proved a daunting task. From the get-go, shoppers didn’t embrace high-priced Haggen, an outsider that touted itself as a cross between Whole Foods and Safeway. The troubled Bellingham, Wash.-based chain filed for Chapter 11 bankruptcy protection in September.
The chain is exiting the region by either closing stores or selling them. Potential buyers in the region have included Gelson’s and Smart & Final.
Other niche players have not been scared off by the failures of Haggen and Fresh & Easy.
Discounters Aldi and Grocery Outlet said they plan to open dozens of Southern California stores.
Grocery Outlet sells overstock brands up to 70 percent off. The first stores will open in early December in Westminster and Costa Mesa.
German-owned Aldi, which has family ties to the operators of Trader Joe’s, sells copycat versions of the nation’s 1,300 most popular brands. The chain, with 1,400 stores in 32 states, said its first 25 California stores will open between March and July 2016. Locally, the first Aldi stores are opening in Buena Park, Fountain Valley and Anaheim.
Analysts say Aldi and Grocery Outlet will shake up the $44 billion Southern California sector at the expense of nearly every player – from Wal-Mart to conventional markets like Vons, Ralphs and Albertsons.
Source: Orange County Register