FAIRWAY ANNOUNCES BANKRUPTCY

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Fairway Group, the grocery chain that began on the Upper West Side, has filed for bankruptcy protection and says it was come up with a restructuring plan with its creditors. The company says the bankruptcy won’t affect operations at its stores.

“The Company expects no interruptions to customer service throughout the process.  Consumers can continue to purchase Fairway’s products at one of their 15 stores, 4 Wine and Spirits stores or Manhattan residents can shop online at https://shop.fairwaymarket.com/.”

It’s not clear if the company will be able to keep all of its stores in the long run — several observers have noted that Fairway appears to have expanded too quickly — but the store on 74th street is probably in a better position than the others. “It seems likely the Upper West Side stores will survive because the properties are controlled by a partnership partially owned by Howard Glickberg, while other locations are leased from other landlords,” Crain’s reported. Glickberg is the company’s vice chairman and the grandson of Fairway’s founder. Fairway started as a fruit and vegetable stand on 74th and Broadway in 1933.

As Bloomberg notes, Fairway hasn’t reported a profit since it went public in 2013.

Photo by Patrick Rasenberg.

FOOD, NEWS | 63 comments | permalink
    1. JRR says:

      I hope that part of the restructuring includes cleaning the stores. They’re filthy.

    2. Brett Weir says:

      Expanded too quickly and whipsawed by competition for sure, but none of the exhaustive pieces about the downfall of Fairway noted a key negative differentiator of the stores: a complete negligence of training staff to create a positive customer experience. If I only had a poblano pepper for each time I asked an employee where to locate a product and was greeted with total disdain, lack of knowledge, incorrect information. Always a sense that the person couldn’t care less. It’s created a love hate relationship with much of the customer base.

      • Noreaster says:

        Your comment leaves me in the dark as to what you would do if you had said poblano pepper for each time you received less than satisfactory service.

      • Jan Yuty says:

        Fairway has increased their prices 20%+ across the store since going public. They previously had great deals but are now on the same level of Whole Foods, with inferior quality.

      • Steven says:

        In my own experience, the store employees have been very knowledgeable about where to find various products, and they have been perfectly pleasant.

      • MeInWhySee says:

        Amen. We were shocked when we first walked into Fairway in the mid-oughts, having spent our whole lives shopping at customer-centric grocery stores in 15 or so states across the US. It seemed like a joke when the clerk at the register slowly folded her hands across her chest and stared at me…after she realized I truly had no clue as to what she expected, she snarled at me that I had to empty my own basket and put the items in front of her, because she was apparently “not getting paid to do the customer’s job” and “that’s all you”. My experiences in the check-out area have not improved in the years since.

        We like to joke about Fairway’s job recruitment program and imagine ads like “are you a surly, lazy person not afraid to stand your ground with people who think they’re something because they bought some fancy cheese and organic baby food? If you can roll your eyes and shake your head no at the same time, we’ve got a job for you!”

        • Brandon says:

          What 15 states were you in? Putting your items on the belt has been standard in every grocery store I’ve ever been in. Where do you shop now that they do this for you?

    3. Tony Kelder says:

      The stores, at least the one on the UWS is NASTY! Absolutely disgusting, from the sidewalk outside of it to the cafe upstairs, everything is just dirty. Rats, mice, insects run rampant. The building is falling down (this is one place that should have permanent scaffolding).

      • Zeus says:

        Hey Tony,
        Been shopping at Fairway since the 1970’s.
        NEVER seen rats, mice or insects running rampant there.

        Maybe they follow you – dude.

        • anon says:

          did you miss the viral rat-in-the-olives video? That was when Fairway and I parted ways.

        • ScooterStan says:

          THANK YOU,Zeus, for daring to speak the truth to an ignoramus!

          The ORIGINAL Fairway at W.74th/Broadway is the VERY ANTITHESIS of the Whole Foods/suburban-supermarket trend. It’s NOT dirty, just old and ALWAYS crammed with loyal customers, who come back because Fairway offers an AMAZING variety of products.

          And the flagship store KEEPS TRYING TO IMPROVE. It now has TWO elevators to enable customers to reach either its excellent 2nd-floor restaurant and/or its HUGE collection of organic foodstuffs.

          Fairway @ 74th is CLASSIC NEW YORK CITY. No suburban supermarket comes close.

          • Sue says:

            I absolutely HATE the restaurant ! I end up spending $20+ for a salad and a soda. And leave hungry.

            Some of the things I’ve ordered were inedible!

            I don’t mind the salads. But I’d need to order 2 or 3 to fill me up.

            Now if friends want to eat there I will happily sit with them and eat before or after.

            • Zeus says:

              What say you Sue?
              The restaurant is terrible?
              The salad for $20 too small?
              You leave hungry?
              Again I’ll say to you all:
              I’ve been shopping at Fairway on 74th street since the 1970’s.
              Never seen rats and mice running rampant.
              Always found amazing food there.
              And the restaurant is way above average, with dishes such as scrambled eggs, for lunch, for under $7, tasty, looking great, and with the roll, totally enough.
              And for dinner, how about trying the chicken schnitzel. Comes with a salad and a heavenly desert, all for around $20, and even if your weight exceeds 200 lbs., no way you’ll leave hungry.
              As well, great hamburgers and steaks, for a price that rivals places on Columbus Ave., and taste much better.

          • Jake says:

            Right you are, Scooter. Could not have said it better myself!
            Been shopping there for decades, never had a problem. Sometimes the staff may be tired – they always seem to be working hard and doing their best. Maybe a smile from you would help a bit! Try it, you’ll like it!

        • Jake says:

          Exactly. Never had a problem at Fairway. Maybe a smile from you might help.

    4. Westender says:

      Fairway’s 74th street store has one of the highest per-square-foot sales of any store in the U.S. Bankruptcy may doom their suburban stores but I’m hopeful that our local shop will continue to thrive.

    5. Michael says:

      Let’s see…For 80% of my needs, should I pay inflated prices for produce, protein, and packaged goods at Fairway, or should I go 2 blocks south and pay the same price as they do in Peoria for the same or similar items at Trader Joe’s? Hmmm…

    6. Janice says:

      Wow. End of an era. Probably.

    7. Young Sally says:

      Back to basics will save Fairway. They don’t need to be in the burbs competing against Stew Leonard etc. But they do offer some things and do some things better than TJ’s.

    8. kbmc says:

      First of all, I shop at Fairway regularly, have for years and have never seen a mice, rat or insect. So, if you’ve seen any, Tony, they are certainly NOT “running rampant.”
      Second, I can get all sorts of organic fresh foods, produce and other organic products, their fresh beans, grains, seeds, nuts, etc. in the upstairs bins, and anything else I need. Without Fairway I would have to go to several stores in different locations to get all I need.
      Different strokes for different folks, but I’m a big fan of Fairway (I shop at the 74th Street store) and hope they’re around for a long time to come.

    9. Chuck D says:

      Their ordering online should give them hope, but they need to build that site properly. Totally a mess to get through. Would buy from them in a second over Fresh Direct, but the website is too clumsy.

    10. Sophia says:

      If the 74th Street Fairway stays open, I’d like to add another suggestion to make it consumer friendly: require that ALL sales people AND stockers be fluent in English.

      • Zelda says:

        “require that ALL sales people AND stockers be fluent in English.”

        What about requiring that Fairway (and all other local businesses) comply with the law by not hiring illegal aliens? That would probably go a long a way toward what you suggest.

      • Zelda says:

        “require that ALL sales people AND stockers be fluent in English.”

        What about requiring that Fairway (and all other local businesses) comply with the law and demanding that they stop hiring illegal aliens, a.k.a. foreign invaders? That would probably go a long a way toward what you suggest.

        Last I checked, plenty of Americans needed jobs.

      • RK says:

        Can I ask why the stockers should be fluent in English, and how that would help the customer experience?

    11. HarveyWillJoy says:

      Fairway made the simple mistake of trying to compete on price with the likes of Trader Joes.

      The fact is that Fairway could’ve charged more and it would have been ok with 80% of its customers. That was before Fairway chose to use thinner bags which hurt your hand or to make people wait in very long lines.

      The fact is that Fairway is busier than ever, if long lines are indicative of busy-ness. The problem is that they destroyed the QUALITY of the food and the experience and now must compete on very thin margins and high volume. It surprises nobody that Fairway is not built for high volume, except of course the people making the decisions who tried to rearrange the store items and failed miserably.

      Of course, I could have told them all of this a long time ago, but was never asked. They have professionals who make these decisions and know a lot of things.

      Fairway may restructure in bankruptcy, but lets face it, Fairway was already gone a while back. I knew it the first time I grabbed the handles of one of those new bags.

      [Side note: every single person in the US and every single corporation can discharge any debt whatsover in bankruptcy. The only exceptions: debts from crime, child support, and wait for it…. student loans.]

    12. WestSide_Mimi says:

      Buy low and sell high just doesn’t work in the grocery business. Lesson to learn.

    13. Liz says:

      I have shopped at Fairway 74th Street for years and am astonished at the negative comments here; when I ask for something, I am directed to it by a courteous employee. Should the produce I buy turn out not to be fresh, I return it and receive a credit from a courteous employee. I find the selection incredible and the quality medium high to high. My only complaints are their firing of Mitchell London, who used to run the upstairs cafe and their irregular supply of flagels!

    14. Derek says:

      The 74th Street Fairway exemplifies all the worst things about the Upper West Side – rude staff, ruder customers, ridiculous prices, and oh so many oblivious housewives trying in vain to maneuver double-wide strollers while sipping Starbucks at the same time. It’s about time to close this circus down.

    15. AC says:

      This could be the beginning of the end.

      Aside from the quick and over expansion, the employees becoming Unionized over ten years ago kind of led to their downfall. Union employees recently ratified a contract and there is no way this Local will give into future concessions, even it was to save their job. Kind of explains (indirectly) why SOME of the employees are rude and ‘uncaring’ to their customers , , , they are protected & can’t be terminated. I remember when the Union tried to infiltrate Zabar’s back in the 1990’s , , , the employees didn’t give in & management rewarded their employee$. Ever notice the difference in customer service between a Fairway employee and Zabar’s employee? A Zabar’s employee could be held accountable; whereas, not a Union employee at Fairway. Such places give Unions, as a whole, a bad rap.

      Restructuring is possible, but involves concessions from ALL (owners, employees, and even customers). Good luck Fairway!

    16. UpperWestSider says:

      No surprise here. Since the private equity jerks took over, the store has been run into the ground. The business model was based on price gouging the loyal Fairway customers. Prices were increased over and over and over while quality declined.

      You now are able to buy at Cirarella and Whole Foods, better quality for less. We also have Trader Joe’s on the UWS, providing way better quality at a fraction of the Fairway exorbitant prices.

      It’s a real shame that a good store was destroyed.

    17. Joyce says:

      First, the bankruptcy was always a question of when, not if, once Fairway went public and started to expand. Classic business model (albeit a poor one). Second, the filth of the UWS Fairway is its rustic charm. Shopping there was never for the faint of heart. If you want a Dean and DeLuca experience,go to Dean and DeLuca. For us long time Fairway shoppers, the competition has only made them better. Fairway is efficient, reliable,offers fabulous variety and is a must for real cooks. Trader Joes may have cheap bananas but when it comes to sourcing ingredients for a real home cooked dinner, they fail every time. I wish Fairway well.

    18. RK says:

      A discussion with a Fairway employee soon after the IPO was that their purchasing decisions now needed to be dictated by the ability to supply a lot more stores, which limits the vendors they can use. I believe a lot of the change in products they stock has been driven by this. Hopefully if they close underperforming stores and re-focus on the core, they can move back to focusing on quality rather than quantity.

      Don’t expect the prices to come down, though… they never do!

    19. RK says:

      This article is probably the most informative I’ve seen about the bankruptcy.

      http://www.nytimes.com/2016/05/04/business/dealbook/fairway-seeks-quick-exit-from-bankruptcy.html

      TL;DR: This is a “prepackaged” bankruptcy, which is more of a financial maneuver than a true bankruptcy. They entered bankruptcy with full agreement from their creditors on the resolution. They will emerge from bankruptcy on June 1 with no impact to customers or employees. It will take the company private again and give control to its largest secured creditors (IE replace debt with equity), eliminating a big chunk of their crippling debt. It remains to be seen whether they can improve operations as well.

      • Lisa says:

        This is pre-packaged, they already have an agreement from their debt holders to convert most of it to equity, and they don’t plan to re-negotiate union contracts or reject leases on any stores from what I could see. They’ll be in and out in a matter of weeks. It’s just a legal formality at this point. This is a salacious headline but really doesn’t mean anything to its customers. It will continue to operate. And for all the whiners, seriously, just go somewhere else and quit whining about it already! I love Fairway. I’ve been on the UWS for over 15 years and as long as I can remember it’s been crazy, crowded, chaotic, packed with a wide variety of fun and interesting food choices, beautiful produce and yes, grime in the corners. I don’t go there for a suburban Target shopping experience.

        • robert says:

          They don’t plan to……
          But look for the creditors to be much more interested in getting $$$ rather than equity
          They didn’t plan to be in this state when they went public a few years ago, did they.
          Things change very quickly when $$$ is at hand.

      • robert says:

        They don’t plan to……
        But look for the creditors to be much more interested in getting $$$ rather than equity
        They didn’t plan to be in this state when they went public a few years ago, did they.
        Things change very quickly when $$$ is at hand.

        • Lisa says:

          They already have agreement with over 70% of their debt holders, which is why they were able to file as a pre-packaged bankruptcy. It’s largely a done deal.

    20. Barbara says:

      Store on 74th street is filthy dirty. The smell from the fish department could knock you over. And staff acts like they are doing you a favor. No doubt they have financial troubles.

      • Blarvin says:

        It’s amazing how some people do not see the fact that this place is filthy. You can feel it when you touch anything. Those bread bins are petri dishes.

    21. Ani Klein says:

      A lot better and more affordable when 1.

    22. Henry says:

      There is not sufficient thought given to operations and customer service. Placing a special order at the meat counter is always a hassle because only one person on the premises has the authority to take the order. Sometimes they use an order form, sometimes they just pencil it on a scrap of butcher paper. I ordered an item recently, got a call that it was in, came to pick it up, and 4 employees could not locate it downstairs. They had to call the manager on his cell phone, and tell him to come back to the store. He was out saying prayers (this was mid-afternoon). I took it to the cash register and they could not ring it up because the cost was $103.50. Ringing up an item over $100 takes a special code. Six checkers and a supervisor came around and tried unsuccessfully to ring it up – of course this took much time and there were dirty looks from people in the line. The eighth staffer knew how to ring it up. I asked why not put in two charges below $100, for some reason they cannot do that.

    23. Peter says:

      Count me among those who love Fairway and don’t understand some of the negative comments here. Dirty? More than half of all New York grocery stores scored ten or more violations last year, but Fairway (UWS and Harlem) keeps getting perfect scores. And I personally find the staff very helpful.

    24. Jeff says:

      Since we’re all using this opportunity to bash/praise Fairway, I’ll add a few thoughts:

      1) The cashiers and deli staff usually seem unhappy/tired, but employees on the floor are typically kind and helpful, and that loud guy at the meat counter is great.

      2) The store has lost some of its flair since going public. I miss the irreverent signs that boasted immodestly about product quality. But there are still fun, boisterous staffers at the sample stations now and then.

      3) The quality at the deli, the olive section and the cheese counter remains inferior to Zabar’s.

      4) There have been some improvements, such as the make-your-own sixers of beers for just $10-$11 and the wider selection of humanely raised meats. The curbside checkout option is also nice.

      In conclusion, hopefully the bankruptcy ends up being a blessing in disguise that allows the company to stop worrying about growth and focus on becoming a small-but-stellar local grocer once again.

    25. Boopsie says:

      I can’t believe that someone has seriously posted that Trader Joes’s has “provided way better quality at a fraction of the Fairway exorbitant prices.” Trader Joes may be cheaper, but the cut-rate quality of their meats, produce and generic packaged products are far inferior to Fairway or even Pioneer.

    26. Sonia says:

      I am so sorry to learn Fairway is facing facing bankruptcy! I walk 17 blocks each week to buy my groceries there because their prices are far lower than the neighborhood grocery stores, their organic selection is the best, as well as their other healthier options. I can count on them for fresh fish, organic roasted chickens and a great selection of olive oil…and on and on. I simply love them. Best to Fairway for many successful years ahead and the full support of the neighborhood. The UWS would really be in a pinch without them!

    27. Karen Miller says:

      Oh, Gd! Save the baguettes, the bagels and the cranberry scones. Trader Joe’s is too close and too close to the subway. Fairway can’t make it.

    28. Beth says:

      Does no one shop at the Harlem store? It’s a great alternative to the cramped 74th St. location. Overall, the store is clean, the deli staff friendly, and the checkout lines speedy.
      Competition from Trader Joe’s is a reality, but the Fresh Direct factor can’t be ignored either. By the amount of trucks I see on the UWS and the deliveries to my building alone, it has to be a threat to Fairway’s survival.

      • m.pipik says:

        You need a car to get there. We are not going to shlep food up a long flight of stairs to the elevated 1 train and then up another flight of stairs to get out.

    29. robert says:

      Ok folks here is the elephant in the room I’m very surprised no one here has picked up on. The real estate, a bankruptcy court judge and the lawyers for the creditors will decide what happens now. The judge has a fiduciary responsibility to work out the best deal for all of the stores creditors. He can order all parties to accept ANY deal that he approves. They will try to work with Fairways attorneys as well but he is the bottom line. The best way fir the creditors to get all their $$$ back is to close the 74th street store asap and sell the site to a developer to build on. I would not be surprised if they made Citerala at the other corner a large $$$ inducement to leave as well. It is a prime site to build on

      • the_the says:

        The article says that the former owners of Fairway still own the 74St property.
        That means that they are leasing the property to the new corp.
        So, it isn’t the new corp’s property to sell.

        • robert says:

          That just makes it another assets to be disposed of at the bankruptcy auction, fire sale judges ordered tfr of assets etc

    30. Ls says:

      For a while there have been rumors that Trader Joes essentially “Wal marts” its suppliers – that is it buys from brands we all know, demands low price and then sticks the TJ name on it.
      Also worth noting that TJ is a “destination ” store with people coming from all over to shop at TJ (lots of shoppers using taxis and Uber so those shoppers have some money 🙂
      Fairway was/is more of a neighborhood store

      • Glen says:

        Everyone does know that Trader Joe’s is part of the Aldi conglomerate, right? It’s a warehouse like operation in Northern Europe…it’s not some homegrown idea that took off big.

        • Mary says:

          Not true. It’s an interesting story, actually, and you can read more about it here:

          http://www.slate.com/blogs/browbeat/2013/12/02/aldi_grocery_store_best_in_america_related_to_trader_joe_s.html

          The Brüder founded their discount-store empire together. A disagreement in 1960 over selling cigarettes hastened a partition, and an epic game of grocery-store Risk: Theo would rename his business Aldi Nord, and would control territories north of the Rhine, plus a healthy chunk of Europe. Karl would head up Aldi Süd, and get southern Germany, more of Europe, plus the U.K. and Ireland. But both companies operate stores in the United States—Aldi Süd operates as Aldi, and Aldi Nord as the now ubiquitous Trader Joe’s.

      • dannyboy says:

        Ls,

        Your insight has hit it on the head! The one common theme that I have identified by reading the WSR and just looking around, is that the concept of “Neighborhood” is under attack on the UWS.

    31. Young Sally says:

      Who knows. Maybe Fairway is setting itself up to be assimilated into Whole Foods — just like Harry’s in Atlanta did more than a decade ago.

      • dannyboy says:

        Reviewing the history:

        80 years as a privately owned grocery.
        3 years as a Public Company.
        Consolidated into a Whole Foods conglomerate?

        I hope not. Sometimes Small is Beautiful.

    32. foodluverandcook says:

      I’ve been a Fariway fan for 15+ years and while I also shop at Citarella and Whole Foods just as much; I like the place. They were a mom and pop shop and probably one of the oldest vendors who can still operate on the UWS. Every other store from over a decade ago has/is closing.

      This was one cornerstone of the UWS other than Zabars that is easily identifiable to EVERYONE who has lived in the neighborhood (lifelong UWSers, celebrities, bankers, drs, news anchors, struggling artists, students, etc) and going there is like a badge of honor which makes it unique. Isn’t that why we are all here on this site…we love the UWS and the uniqueness of it? It’s a unique neighborhood where you (used to be able to) walk down the street and talk to your neighbors…but alas even from the posts here, it is changing.

      The only people that seem to have a beef with Fairway are newcomers to the UWS who may used to UES and to suburban type stores. I mean, if you travel around the city, check out Gristedes, A&P, Food Emporiums, CTowns, Gardens of Edens…several I have seen in horrible condition.

      As for Trader Joes, for me it was just another chain store who flock to it like their ready made frozen meals, a different generation, for certain.