Due to unprofitability, Fresh & Easy supermarkets is closing down or selling off its remaining 100 stores after almost 8 years its debut in the United States. According to supermarket mogul and billionaire Ron Burkle, who bought the British-conceived grocery chain from retail giant Tesco two years ago, Burkle investment firm Yucaipa Cos. would liquidate all stores in the coming weeks.
In a company statement released Wednesday, Fresh & Easy announced that it is shutting down its 100 stores in California, Nevada and Arizona. The company also sent the state mandated "WARN Act" layoff notices to 3,000 employees. However, the company said they also would try to sell parts or all of the brands locations and operations.
"Over the last two years, we have been working hard to build a new Fresh & Easy," company spokesman Brendan Wonnacott said, as per The Orange County Register. "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," Wonnacott added.
Since making its debut in 2007, Fresh & Easy, which was British supermarket giant Tesco's first venture into the United States, has thrashed. While the chain ultimately grew to 200 locations after becoming the European version of the Trader Joe's chain that offered a variety of groceries focusing on fresh products, including ready-made meals to go, it was always unprofitable, according to Los Angeles Times.
After losing millions of dollars on the concept, the chain filed for Chapter 11 bankruptcy protection in 2013. Yucaipa Cos. bought most of the Fresh & Easy operations after it sought protection from creditors. The purchase included 167 stores, as well as distribution and manufacturing facilities in Riverside. The remaining unpurchased stores were shut down.
Due to lack of sufficient funds and financing to continue operations, Fresh & Easy finally decided to close down its business. Although the company made progress over the last two years, their revenues were just "closer to break even." While the layoffs are starting in the company next week, it will continue to look for a buyer, The Eastsider noted.
Meanwhile, Willard Bishop grocery analyst Craig Rosenblum has said that Fresh & Start underestimated the cost of the infrastructure, thus its turnaround plan failed despite marketing strategies including low-priced natural and organic food products, takeout meals and speedy self-checkouts for time-pressed shoppers.
"I applaud them for trying to make an attempt to become the health and natural convenience store," Rosenblum said. "Unfortunately, the cost associated with fresh, natural organic products and the infrastructure is too great to allow them to pull off their objectives."
Rosenblum, however, emphasized that Fresh & Easy's exit is "not going to scare people off" since the opportunities in Southern California are still great.
"The reality is that you have to have the right infrastructure and differentiated offering to be successful in the Southern California market," Rosenblum said.
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