Fairway Market braces for another bankruptcy filing

January 2, 2020

By Lisa Fickenscher | New York Post

Fairway Market, the beloved Big Apple grocer that has been a staple on the Upper West Side for nearly a century, is on the verge of filing for bankruptcy — again, The Post has learned.

Known for its quality produce, prepared foods, cheeses and smoked fishes, Fairway is now preparing to seek bankruptcy protection this month after failing to find a buyer for its 14 stores, multiple sources tell The Post.

The legendary chain, whose tag line is “Like no other market,” may even lose its flagship store on Broadway and West 74th Street as competitors, including ShopRite, have toured the store with an interest in acquiring the real estate, sources say.

“If they are selling their flagship store, which makes all the money, this could be a liquidation instead of a reorganization,” a well-placed source said.

Fairway’s downturn started in 2007 when the Glickberg family sold an 80% stake to private equity firm Sterling Investment for $140 million. Four generations of the family had owned and operated a handful of Fairways in NYC, starting with a fruit-and-vegetable stand that opened in 1933.

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.

Half of its 14 stores — and the ones struggling the most — are in the suburbs of Long Island, Connecticut and New Jersey, sources said.

“No one bought Fairway because there are still some suburban properties that need to be sold off and its debt is too high,” said retail consultant Burt Flickinger.

Fairway has at least $172 million in debt that matures in 2023 and 2024, according to David Tawil, an expert on distressed debt, who said companies often seek bankruptcy ahead of their debt coming due if they are in danger of tripping debt covenants, including agreements to meet certain financial projections.

In recent months, the grocer has been dangling deals — including coupons for $10 off a $50 bill — to lure in shoppers as it struggles to compete with rivals like Trader Joe’s, which muscled into Fairway’s Upper West Side turf a decade ago with lower prices and a cult-like following.

But the grocer’s once-lush produce section has grown skimpy “and they have raised prices,” bemoaned a source with knowledge of the bankruptcy, who did not want to be identified.

“It went from an everyday, low price model to a typical high-priced supermarket,” this person said.

Fairway did not return calls for comment.