TORRANCE, Calif. — After a strategic evaluation, financially troubled small-format grocery chain Fresh & Easy filed its second bankruptcy in two years under two owners. Fresh & Easy LLC filed for chapter 11 bankruptcy protection October 30 in U.S. Bankruptcy Court in Wilmington, Del.
As reported in a 21st Century Smoke/CSP Daily News Flash, U.K. retailer Tesco Plc put its failed U.S. chain Fresh & Easy Neighborhood Markets Inc. into bankruptcy in October 2013 and sold most of the 167 stores to Yucaipa Cos., a private-equity firm led by billionaire Ron Burkle.
Reports surfaced earlier this month that the new Fresh & Easy would file for bankruptcy protection. The Torrance, Calif.-based company would not confirm the reports, but later acknowledged it was “unable to obtain financing and the liquidity necessary to continue to fund the business” and was winding down.
“Over the last two years, we have been working hard to build a new Fresh & Easy,” Brendan Wonnacott said in a statement provided to CSP Daily Newsin mid-October. “While we made progress on stemming our losses and moving the business closer to break even, unfortunately we have been unable to obtain financing and the liquidity necessary to continue to fund the business going forward. As we start the process for an organized wind down of the business, we continue to work to sell all or part of the business.”
Representatives for the company did not respond to a new request for comment about the bankruptcy by posting time.
Fresh & Easy’s independent managers “evaluated the company’s strategic alternatives in connection with a possible restructuring or liquidation of the company, and have determined that the filing of a voluntary petition for relief under chapter 11 … of the [U.S. Bankruptcy Code] is in the best interests of the company and its stakeholders,” court documents said.
Fresh & Easy listed as much as $500 million in liabilities. Coca-Cola and Frito Lay are among its top creditors.
The court has approved a deal with Hilco Merchant Resources to dispose of Fresh & Easy’s inventory, according to court documents.
The retailer has posted a notice on its website (see below), www.freshandeasy.com, reading, among other things, “All stores closing! … Everything must go! … Up to 40% off original prices. … Nothing held back!” It also tells customers to redeem their Friends Rewards.
Along with Whole Foods and Trader Joe’s, supermarkets “face strong competition from conventional convenience stores which are increasingly focused on delivering higher-quality food, grocery stores which are selling more prepared foods and fast-casual restaurants which tout higher-quality ingredients prepared in front of you,” Jennifer Bartashus, a Bloomberg Intelligence analyst, told the news agency.
Fresh & Easy, created by British retail giant Tesco in 2007, promised low prices on natural and organic foods, takeout meals and speedy self-checkouts for time-pressed shoppers. The company filed for bankruptcy after losing millions of dollars on the American experiment. Tesco invested about $1.6 billion in the venture.
The Yucaipa purchase included 167 stores, as well as distribution and manufacturing facilities in Riverside, Calif. 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 Jim 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.