The popular Fairway supermarket chain, which started as a produce stand on the Upper West Side in the 1930s before becoming a private equity acquisition in 2007, filed for Chapter 11 bankruptcy in January. Now, in a deal hammered out last week, the Red Hook and Douglaston, Queens locations have been bought by Food Bazaar operator Bogopa Enterprises Inc. The stores will become Food Bazaar stores, Bogopa confirmed.
The company paid less than $900,000 per store, according to reports, and that price covers assets and inventory, as well as lease assumption.
“Buyer to enter into new lease agreement with landlord for Red Hook Store, and Debtors to reject existing lease, with no cure costs to be paid,” the court filings read. The rent for the 52,000-square-foot store was $1.5 million a year, according to the Real Deal.
The sale is expected to be approved by a bankruptcy judge Thursday, according to multiple reports.
The Douglaston store, located in a mall off the Long Island Expressway in eastern Queens, is selling at a “base price of $100,000,” with the buyer taking over the $208,000 lease, and paying $800,000 for the inventory, prepaid expenses, and cash.
In its Chapter 11 filings, Fairway cited “a net loss of approximately $65.8 million for the previous twelve month period and assets totaling approximately $158.9 million and liabilities totaling approximately $288.7 million.” The company began auctioning off assets, including a deal with ShopRite owner Village Super Market Inc for most of its Manhattan stores and a distribution center for about $70 million. The leases to two New Jersey locations were sold to Amazon.
Last week, the Harlem Fairway location closed, laying off about 165 employees, Crain’s reported. The Douglaston store was poised to close, with 150 employees about to lose their jobs, until the deal with Bogopa was announced, according to Crain’s and the Queens Chronicle.
The court filings say Bogopa promises to “engage in good faith negotiations” with the unionized Fairway employees’ collective bargaining agreements and that “the Buyer is obligated to offer employment to substantially all, but in any event, no less than ninety percent (90%) of union employees at the Acquired Stores.”
Bogopa operates stores in the tri-state region, including 17 in New York City.
The Red Hook store, located on a lot on Van Brunt Street with sweeping waterfront views, was a popular shopping destination but also criticized as an overpriced symbol of gentrification in a neighborhood desperate for affordable fresh grocery options. AsCrain’s New York Business pointed out, the Red Hook store’s opening in 2006 was “live-blogged by The New York Observer, and its 2013 reopening after Superstorm Sandy was attended by Mayor Michael Bloomberg, Sen. Charles Schumer and Miss America.”
Fairway fans accustomed to the stores’ idiosyncratic international offerings may be comforted by Food Bazaar’s similar approach: “We pride ourselves on going to great lengths in order to provide each of the communities that we are part of with the flavors that they love and recall from ‘back home.’ In fact, it is our passion! We devote aisles of space to international grocery and dairy/frozen items as well as including a full-service fish market within most of our stores. Our stores reside and are part of many different neighborhoods, each vibrant with numerous ethnicities and nationalities, and their corresponding cultures and flavors. It’s a culinary adventure when you shop our supermarket!” the website proclaims.