Earth Fare, an organic grocery store chain, has filed Chapter 11 bankruptcy and says it will close all of its roughly 50 stores.
The majority owner of the company is Oak Hill Capital, a private equity investor. Inventory liquidation is now underway at the Asheville, North Carolina-based grocer, which cited its inability to refinance its debt as the main reason for its demise, along with the relentless competitive pressures of the grocery business.
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Earth Fare, which was founded as Dinner for the Earth in 1975, specializes in organic food sales, which generally eschews foods produced using synthetic pesticides and fertilizers, GMOs, synthetic growth hormones, and artificial flavors, colors or preservatives.
The chain, dubbed Earth Fare in 1994, grew quickly after a previous investor, Monitor Clipper Partners, acquired it as a 13-store operation in 2006. Oak Hill bought the chain in 2012.
Wholesaler United Natural Foods is Earth Fare's largest unsecured creditor, which it owes $9.6M, The Wall Street Journal reports. Earth Fare also owes wholesaler Inland Seafood $6.2M.
Demand for the organic foods that Earth Fare sells has been growing rapidly in recent years. In 2009, U.S. sales of organic food totaled about $21.2B, while in 2018, the total was $47.8B, according to the Organic Trade Association. The 2018 total was a 5.9% increase compared with 2017.
That kind of demand fostered intense competition in the organic grocery sector. Whole Foods, Sprouts Farmers Market and the Fresh Market are some marquee-name competitors, Grocery Dive reports, along with Lucky’s Market, which itself recently went bankrupt. The largest grocery chains have also been expanding their organic offerings in recent years.
Even though grocery openings have spiked in recent years, small grocery chains and independent operators are under pressure in numerous ways. Other forces vexing that segment of the industry are higher costs, especially labor and rent, and mega-retailer Amazon, as it ramps up its efforts to deliver food at lightning speed.
Also, as in the case of the recently bankrupt Fairway Market in New York, private-equity owners have been undertaking ill-fated expansion plans in the grocery sector and loading grocery chains up with debt.
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