Popular grocery chain closes down in bankruptcy liquidation

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According to The Street, The grocery store sector has encountered significant challenges since the onset of the Covid-19 pandemic in 2020, which forced many operators to reduce store occupancy levels to between 20% and 50% to comply with social distancing requirements.

Impact of Reduced Occupancy and Shifting Consumer Behavior

These lower occupancy requirements resulted in decreased revenue for grocery stores, as many consumers opted for online shopping rather than waiting in long lines for their groceries. As the pandemic has subsided, grocery stores have faced additional financial obstacles, including rising inflation that has driven up the costs of food and merchandise, increased labor expenses due to rising minimum wages, and higher interest rates on debt.

Increased Competition and Store Closures

Smaller grocery chains are also grappling with intensified competition from big-box retailers like Walmart (WMT), Target (TGT), and Costco (COST), which offer a wide variety of products, including groceries, at competitive prices. These financial pressures have led some grocery chains to close underperforming stores and, in certain cases, file for Chapter 11 or Chapter 7 bankruptcy.

In April 2024, Foxtrot Market and Dom’s Kitchen & Market, which operated 33 stores in cities including Chicago, Washington, Dallas, and Austin, abruptly closed all their locations. The parent company, Outfox Hospitality, subsequently filed for Chapter 7 liquidation in May. However, Foxtrot’s co-founder, Mike LaVitola, who was not involved in the closure or bankruptcy, successfully led a group that reopened two Foxtrot locations in September.

Store Closures by Stop and Shop

Regional grocery chain Stop and Shop, owned by Ahold Delhaize, announced in July that it would close 32 of its 397 stores located across Connecticut, Massachusetts, New Jersey, Rhode Island, and New York. Ahold Delhaize USA CEO JJ Fleeman stated, “The value proposition and pricing at Stop & Shop are simply not strong enough,” which contributed to the decision to close these locations.

Choice Market Ceases Operations

In a notable case, Choice Market, a Denver-based upscale grocery chain, announced on October 7 that it would permanently cease operations after failing to restructure its business. This decision came just three days after the company filed a motion in the U.S. Bankruptcy Court for the District of Colorado to convert its Chapter 11 case to Chapter 7 liquidation.

Choice Market’s CEO, Mike Fogarty, expressed his regret in a LinkedIn post, stating, “This is a tough post to write, but after several months of working through a potential reorganization, unfortunately, Choice is closing its doors for good.” The company originally filed for Chapter 11 protection on May 6, 2024, in an attempt to secure new financing and recover from pandemic-related setbacks.

Transition Plans and Final Closure

Choice Market, established in 2017, aimed to pivot away from its upscale urban grocery stores and focus on small-format mini-mart locations, intending to launch this new direction within six to nine months. However, rising costs for goods and labor due to inflation made it impossible for the company to achieve its goals.

Before its financial struggles, the Denver-area grocery chain had grown to five locations, combining quick service, user-friendly technology, and a selection of healthy products. Ultimately, the company was unable to overcome the severe financial distress it faced, leading to its closure.

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