Fairway Market Is for Sale Again in Sector Beset by Price Wars

(Bloomberg) -- Fairway Market is for sale again, three years after the quintessential New York City grocery emerged from bankruptcy with new owners.

The company’s sponsors, which include Brigade Capital Management LP and Goldman Sachs Group Inc., have begun the formal process of seeking bidders and have received interest from potential strategic and financial buyers, said the people, who asked not to be identified because the process isn’t public.

Representatives for Fairway didn’t respond to requests for comment.

Heavy competition and price-cutting hurt Fairway in the months following its 2016 bankruptcy, and Moody’s Investors Service said last November that another debt restructuring seemed highly likely. Chief Executive Officer Abel Porter responded in an interview at the time that Fairway was accumulating cash and was “in no risk of running out of capital.”

Porter, who took over in 2017, said in the interview he was focused on expanding the produce selection and online sales, and adding services in the stores.

Bankruptcy Filing

Founded in 1933, Fairway filed for Chapter 11 protection in 2016 after losing money in every quarter since its 2013 public offering. It emerged under control of its lenders, with debt reduced to about $84 million from almost $300 million. Fairway arranged another debt overhaul in 2018 with a five-year extension.

Moody’s deemed it a distressed deal, predicted another restructuring within 12 to 18 months and said the company’s small scale makes it hard to compete with bigger rivals.

Fairway is still being pressured by the expansion of Whole Foods, Trader Joe’s and delivery services that have nibbled away at its dominance of gourmet and organic grocery sales. On the plus side for potential buyers, Fairway occupies prime locations in Manhattan and Brooklyn and has a loyal following of shoppers, with long lines that sometimes wind back into the store and the aisles.

As the national chains expanded, Fairway began its own migration, opening stores in the suburbs of New Jersey, Long Island and Connecticut. It defied speculation by keeping most of them open after the bankruptcy, and now operates 15 supermarkets and four wine stores in and around New York City.

©2019 Bloomberg L.P.

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