Fairway, the supermarket that started from a fruit and vegetable stand on the Upper West Side and grew into a popular local chain known for its expansive inventory and fresh produce, pushed back today against a NY Post report that it would close all of its stores amid financial difficulties.
"Despite reports, Fairway Market has no intention to file for chapter 7 or liquidate all of its stores," the company Tweeted on Wednesday morning. "All 14 stores remain open for business, offering a complete range of high quality, specialty food products, and we look forward to seeing our customers and employees."
A spokesperson for the chain, Rica Hermosura, said in a statement, "Despite reports, Fairway Market has no intention to file for chapter 7 or liquidate all of its stores. Such statements are categorically untrue and disappointing. Fairway has been engaged in a strategic process and expects to soon announce a value maximizing transaction that will provide for the ongoing operations of stores. Our lenders remain extremely supportive of our efforts. All 14 stores remain open for business, offering a complete range of high quality, specialty food products, and we look forward to seeing our customers and employees."
Workers were seen restocking shelves across the Upper West Side location on Wednesday. At the Red Hook location, employees believed the store would be open tomorrow; one mentioned that they would hear from their supervisor this afternoon about whether this would be case.
Earlier this year, the Post reported that the chain was "on the verge of filing for bankruptcy" and looking for a buyer. Now anonymous sources tell the tabloid that Fairway will close all of its stores: "The New York City chain — known for its wide selection of cheeses and cheap produce — is planning to file for a Chapter 7 bankruptcy, which means the grocery chain does not currently have a plan to continue to exist — unlike when it filed what’s known as a Chapter 11 reorganization plan in 2016."
According the history chronicled on its website, Fairway was started in the 1930s as a produce stand and became a brick-and-mortar store, run by Nathan Glickberg and his son Leo, in 1954. Leo's son Howard took over the store in 1974, and turned into a local New York City institution, starting with a flagship on the Upper West Side and then a much larger, 35,000-square foot location in Harlem (it was supposed to compete with Costco).
In 2007, private equity firm Sterling Investment Partners bought 80% of the company; its press release bragged, referring to the UWS, Harlem, Red Hook (which opened in 2006, to much fanfare), and Long Island locations as having the "highest volume sales per square foot of any grocery in the country." Sterling eventually brought it to an IPO, but the Post explained on January 2nd:
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.
Three years later, in May 2016, it filed for Chapter 11 protection after losing money in every quarter of its life as a publicly held company. 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.
(Other grocery chains, including A&P/Pathmark [RIP], have been driven to bankruptcy by private equity firms.)
In the early days of Sterling's ownership, the store still had its Native New Yorker personality, like the notoriously crummy elevator that took minutes to go one floor. It even prompted a front page New York Times story. On the other hand, private equity did mean that Fairway could get a second elevator.
"They already went bankrupt once, so you can't be too surprised," shopper Darrin Litsky told Gothamist on Wednesday. Litsky, an Upper West Sider who has been shopping at Fairway for 15 years, said he shopped at the Trader Joe's just two blocks away, but hates the lines there. "You can't get in and out quick."
According to the Post, "Village Super Market, the publicly held owner of ShopRite, has expressed interest in acquiring a handful of Fairway stores and keeping the name, sources tell The Post... Aside from Village Super Market, prospective buyers of stores owned by Brigade Capital Management and Goldman Sachs Group were scared off by its $174 million debt and expensive leases, including $6 million in rent on its flagship store, sources explained."
Litsky thought that if Fairway were to go bankrupt, it would be unlikely another supermarket would open in the UWS space. "This will be torn down for apartments, condos," he predicted.
There are currently seven locations in NYC: UWS, Harlem, Upper East Side, Kips Bay, and Chelsea in Manhattan, and Red Hook and Georgetown in Brooklyn. The Red Hook location is especially beloved, after it reopened post-Superstorm Sandy in 2013, with one shopper calling it the "artery of Red Hook."
One employee tagging prices on items at the Red Hook store was sentimental. The employee, who wished to remain anonymous, said, "Everyone here is family" and described growing up with other employees and giving back to the community through Sandy
However, New Yorkers have a variety of options now, with the proliferation on online shopping, like FreshDirect and Peapod, plus the entry of Whole Foods and Trader Joe's to more neighborhoods. Fairway shopper Katherine Yang told Gothamist on Wednesday that she compares prices across stores for the best deals, and opts for online groceries when she's buying heavier, bulkier items. "There's the convenience of delivery, as well as the prices," she said. She added, "I do buy my fresh produce, meat, and fish at Fairway," because those items can be hit-or-miss online.
Bloomberg News offered this statistic last year: "Just 44% of food sales today go to traditional grocery stores, down from 90% 30 years ago, according to Inmar Analytics."
Still, Yang, also an Upper West Sider, said. "It's sad because a neighborhood means having neighborhood stores." She did not agree with Litsky's assessment that going to Fairway was easy. "My husband refuses to come here" because it gets so crowded, she said.
Trader Joe's has steadily expanded in the New York and New Jersey region in recent years. But Litsky proudly showed off his Fairway purchase, a bag of six bagels: "Can't buy a decent bagel at Trader Joe's."
Additional reporting by Muhammad Rahman