Four factors that flattened Earth Fare

Plus: SouthPark's Colony Apartments demolished; Amazon HQ2 search was a sham, article says; SouthPark mall owner buys Forever 21

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Burdened with debt, organic grocery chain couldn’t make loan payments, court documents say; Last-minute deal collapsed

— Tough time repaying $65M in loans from Fifth Third and Wells Fargo

— Frantic last few months at Asheville HQ; Buyer fell through last Wednesday

— Liquidating stores, 3,270 workers out of jobs

— Big sales until end of the month

On its face, the announcement this week that Earth Fare is closing all 50 of its stores seems puzzling. The market for organics is growing. Its stores are close to many of the Southeast’s swankiest neighborhoods. And it seemed to be expanding, not contracting, with the opening of a new store in Steele Creek just a year ago.

Yet despite those favorable trends, the Asheville-based company filed for bankruptcy protection on Tuesday. It largely stopped restocking its shelves and hopes to wind everything down by the end of the month — leaving more than 3,200 employees scrambling for new jobs and forcing customers to find new sources for everything from gluten-free French toast sticks to alkaline water to organic blueberries.

So what happened?

When companies abruptly close, there are usually multiple reasons. We could chalk it up to tough competition — but there are plenty of other grocery companies still competing. Earth Fare is the third organic grocer to file for bankruptcy protection in the last two weeks. By looking at those examples and talking to experts, some trends emerge. Among them:


Earth Fare started in 1975 as an Asheville natural food store named “Dinner for the Earth.” For two decades, it had what we can surmise was a robust business selling granola to mountain hippies. It became Earth Fare in 1994 and started expanding into other markets, moving into South Carolina in 1997 and Florida in 2010. It now has 50 locations and about $465M in annual sales, court documents say. It had announced plans to reach 100 stores by 2024.

But running a chain in far-flung areas is different than running a single store in Asheville. Some of the new stores “have struggled for a variety of reasons unique to store location or competition in certain markets,” the company said in its bankruptcy filing. New stores cost money, of course, and even some of the older stores “required significant capital improvements, which caused a strain on liquidity.”

Examining the recent bankruptcies of organic grocers, a Forbes columnist this week wrote: “The real culprit here seems to be undisciplined expansion. … Growing fast and in diverse markets didn’t work.” An industry analyst told the trade publication Grocery Dive that Earth Fare’s key markets “were some of the most over-stored on the Eastern seaboard.” Another source told the publication that the company “lost the local appeal that had been so crucial to its early success.”

Upscale competition

Competition at grocery’s high-end has gotten crowded. Notably, Whole Foods’ 2017 purchase by Amazon gave it new strength to invest in innovation while cutting prices at least three times. Earth Fare lacked the resources to compete technologically and on price. Meanwhile, well-funded giants including Walmart, Target and Amazon were eating into Earth Fare’s business, both in physical stores and online. Newcomers, including healthy meal delivery companies such as Blue Apron and Hello Fresh, also posed a challenge.

As you probably know, some of Earth Fare’s products were expensive — like a 16-ounce jar of non-GMO peanut butter that cost $8.49:

Downscale competition

Earth Fare is known as a seller of organic food. But nowadays, everybody is getting into the game. Even Aldi has started advertising its selection of organics. And there are plenty of other, less expensive grocers in the markets where Earth Fare operates.


In 2012, when private-equity firm Oak Hill Capital Partners took an 80% stake in Earth Fare, the company’s debt ballooned from $40M to $65M — a sum it was never able to pay down. As of Tuesday, Earth Fare still owed a combined $63M to Fifth Third Bank and Wells Fargo, and it took out an additional $15M in July, court documents show. It also owes an estimated $60M or so to suppliers and other creditors. The company lacked the cash to make the payments on the loans, which came due at the end of 2019, and lenders weren’t willing to refinance them. The sale of store inventory and other assets will help pay off those debts, but probably not in full.

Oak Hill didn’t respond to an email Tuesday.

Roger Derrough, who founded Earth Fare and ran it until 2007, told the Asheville Citizen-Times: “It certainly seems like they could’ve been making better decisions the last couple of years. I don’t know why this snuck up on them, or if [Oak Hill] is so big they can just write this off.”

Race to save Earth Fare: The bankruptcy filings depict a frantic last couple of months at Earth Fare headquarters in the town of Fletcher, outside Asheville. Earth Fare reached a deal in December to sell off five stores to gain enough cash to keep the company running while it worked with the one potential buyer that could throw the company a lifeline.

On Jan. 8, Earth Fare execs received a term sheet from the potential buyer, who wanted to acquire 33 of Earth Fare’s stores plus its headquarters. Three weeks of intensive negotiations followed, including a face-to-face meeting in Fletcher on Jan. 28. The following day, though, the potential buyer said it wasn’t interested. (The company isn’t identified in court documents.) Instead, Earth Fare hired a liquidation specialist last Thursday.

On Friday, Earth Fare’s largest supplier informed it that it would stop shipping products to the grocery chain. Earth Fare owed it too much money, the company said.

Know more: If you want to geek out on Earth Fare bankruptcy filings, you can find Earth Fare’s narrative of what happened on the Ledger’s website.

RIP, Colony Apartments

Demolition has started on the Colony Apartments in SouthPark, and man, is it ever demolished:

But in a few years, it will be replaced with apartments and retail expected to look something like this:

The Colony development is expected to have apartments, a Publix, a Life Time Fitness and other retail. It is expected to open in a couple years. (Renderings courtesy of Synco Properties. For additional renderings — including one of apartment dwellers frolicking with a beach ball in the pool — check out The Ledger’s website.)

Today’s supporting sponsors are The McIntosh Law Firm/Carolina Revaluation Services

… and Cardinal Real Estate Partners:

Amazon’s HQ2 search: Was it a sham contest run by an egomaniac?

Remember the competition in 2017 to land Amazon’s second headquarters? You know, the one where Charlotte failed to make the cut of the top 20 cities, but Raleigh, Nashville, Indianapolis and Columbus, Ohio, did?

Well now more information is emerging about that fabled Amazon search known as HQ2. And it turns out that Charlotte’s bid might not have been so lacking after all.

Fueled by rivalry: An amazing story by Bloomberg out this week says that Amazon CEO Jeff Bezos decided to launch the unorthodox nationwide economic-development beauty pageant because he was jealous that Tesla CEO Elon Musk had managed to squeeze $1.3B in tax incentives from Nevada for a battery plant.

Based on conversations with 12 people familiar with Amazon’s search, the article reports that the company already had developed a list of 25 locations suitable for a second headquarters … but decided to proceed with a nationwide competition anyway:

Amazon had been quietly scouting cities and had already identified 25 that could accommodate about 20,000 employees, according to the people.  The company could have whittled down that list and negotiated with select finalists. Instead, Bezos pushed for the bakeoff. Musk had enticed five states into a bidding war; Bezos would open his contest to all of North America, even if putting a second HQ in Canada or Columbus, Ohio, was unlikely.

The list of 20 finalists, culled from applications from 238 cities, largely overlapped with Amazon’s earlier list of 25 potential locations:

Leaving in smaller cities like Indianapolis and Columbus, even though few team members took them seriously, helped Amazon send a message that all cities had a chance, according to one of the people involved on the project. Maintaining the competitive frenzy took priority over further narrowing the list. … The prevailing sentiment inside the HQ2 team after cutting hundreds of communities: that was tough, but necessary. They were mostly relieved to be one step closer to completing the search and celebrated with beer and wine.

Great. Thanks, Amazon.

If you were ticked off that Charlotte was excluded from Amazon’s short list, you’ll be doubly ticked off reading the full article, entitled “Behind Amazon’s HQ2 Fiasco: Jeff Bezos Was Jealous of Elon Musk.”

In brief

  • Mall owner buying fashion chain: Simon Property, the owner of SouthPark mall and Concord Mills, is part of a group of two landlords and a brand specialist that have reached a deal to buy fashion retailer Forever 21 out of bankruptcy. Forever 21 rents about 100 stores from Simon in the U.S. (Retail Dive)

  • No more tacos? The Charlotte area’s three Fuzzy’s Taco Shop restaurants appear to have closed. The chain had three local stores — at Rea Farms, Matthews and Steele Creek — but Yelp lists them as closed, they no longer appear on the national website and the Rea Farms location had a sign on the door Tuesday night that said “this location is currently closed.” Franchisee Merrick McKinnie did not return a phone call Tuesday. He told the Biz Journal in September that he “expects to double the number of restaurants here over the next few years,” and the publication said the chain “already has a built-in following.”

  • Macy’s closures: Macy’s plans to close 125 stores, or about one-fifth of its locations, the company said Tuesday. In the Charlotte area, it has stores at SouthPark and Northlake. It didn’t announce what stores are closing. (CNBC)

  • Rolling Stones to Charlotte? Images of a mouth with a tongue sticking out accompanied by Rolling Stones lyrics have appeared in recent days at Bank of America Stadium and the EpiCentre — leading to speculation that a concert announcement is imminent. (WSOC)

  • Affordable housing in South End* : A new development called Centro RailYard in South End is renting studio apartments for $1,092/month. The catch: They are 396 square feet, “about the size of a two-car garage.” (Agenda)

This week in podcasting

A round-up of interesting moments in recent Charlotte podcasts

  • Uptown Charlotte’s ‘Potemkin village’: WFAE politics reporter Steve Harrison traces the path to the 2020 Republican National Convention with interviewer Lisa Worf. He recalls the 1994 Final Four held in Charlotte, when city officials established a pop-up entertainment district uptown: “The thing that really stood out was Charlotte’s efforts to give fans something to do. There was the infamous Street of Champions. … The city had created this Potemkin village of bars and restaurants uptown to create nightlife on South Tryon Street where there was none. It was actually a little tent city. There was a temporary Fat Tuesday daiquiri bar. … The New York Times called the Street of Champions ‘an instant downtown as permanent as a movie set.’” (Inside Politics: The RNC in Charlotte, Jan. 23, 20 minutes)

  • Pro soccer excitement: In the first episode of a new podcast on Charlotte’s Major League Soccer team, Johnny Wakefield tells Corey Inscoe about the appeal of late-game goals: “In soccer, there’s all this build up. … If there’s a late goal that gives your team the win, and there’s been all this build up throughout the whole game, it’s like an orgasm in the crowd. There are 20,000, 30,000, 40,000 people who just explode with all this emotion and excitement, and the crowd goes crazy, and beer is thrown. It is probably the best feeling in sports.” (Mint City Soccer Show, Feb. 2, 46 minutes)

Cheap getaways from CLT

  • This weekend: Charlotte to Las Vegas, $92 round-trip on American (nonstop), Feb. 8-12.

  • Charlotte to Philadelphia, $41 round-trip on Frontier (nonstop), Feb. 20-23.

  • Charlotte to Newark, $58 round-trip on Spirit (nonstop), Feb. 27-March 2.

  • Charlotte to Orlando, $45 round-trip on Frontier (nonstop), various dates in February-March.

  • Charlotte to Fort Lauderdale, $62 round-trip on American (nonstop), various dates in February-March.

  • Charlotte to San Juan, Puerto Rico, $146 round-trip on Spirit (one-stop), April 24-May 2.

Source: Google Flights. Fares retrieved Wednesday morning. They might have changed by the time you read this.

Programming note: Ledger editor Tony Mecia appears as a guest on 90.7 WFAE at 6:40 a.m. and 8:40 a.m. on Thursdays for a discussion of the week’s local business news in the station’s “BizWorthy” segment. Audio and transcripts are also available online.

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The Charlotte Ledger is an e-newsletter and web site publishing timely, informative, and interesting local business news and analysis Mondays, Wednesdays, and Fridays, except holidays and as noted. We strive for fairness and accuracy and will correct all known errors. The content reflects the independent editorial judgment of The Charlotte Ledger. Any advertising, paid marketing, or sponsored content will be clearly labeled.

The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.