Fresh & Easy
Fresh & Easy’s fade-out comes as competition increases for local shoppers’ food dollars.

Shan Li and Samantha Masunaga
November 6, 2015

When Fresh & Easy was taken over by investor Ronald W. Burkle’s Yucaipa Cos. in 2013, it seemed as if the money-losing grocery chain would finally get a chance to turn things around.

After all, the onetime box boy made his fortune in the supermarket industry, handling leveraged buyouts of chains such as Food 4 Less and Ralphs. If anyone could save the struggling company, analysts said, it would be a man known as the supermarket billionaire.

But last month, Fresh & Easy sought Bankruptcy Court protection for the second time in two years. Stores will be closed by mid-November. And employees have filed suit accusing the grocer of violating state rules that require at least 60 days’ notice for layoffs.

Despite efforts to shake up the chain under Burkle, the problems plaguing Fresh & Easy got worse, employees and analysts said.

Beyond a few experiments, Burkle never invested the money to enact a vision of attracting affluent shoppers with upscale convenience. The chain failed to communicate the stores’ mission. And cost cutting, price increases and distribution snags turned off even loyal customers.

“When they took it over, they weren’t willing to make the commitment,” said Jim Prevor, a food analyst and founder of the Perishable Pundit. “The minute they backed away, you are left with the same stores.”

Fresh & Easy’s fade-out comes as competition increases for local shoppers’ food dollars.

Big-box retailers such as Wal-Mart and Target have been expanding their food offerings. Online giants and Google have been rolling out grocery delivery. New rivals like Aldi are coming to town, while established competitors like Whole Foods are opening new locations — including a store in downtown Los Angeles on Wednesday.

That kind of rivalry did in Haggen, the Northwest supermarket chain that filed for bankruptcy protection in September and said it would close its stores in California, Nevada and Arizona. And Japanese convenience store chain Famima, which launched an ambitious U.S. expansion in 2005, closed the last of its local operations in October.

Yucaipa acquired more than 150 Fresh & Easy stores out of the chain’s 2013 bankruptcy, with a $120-million loan from Tesco, the British supermarket giant that sought to conquer U.S. markets in 2007 but ended up losing more than $2 billion on the venture. About 4,000 employees were able to keep their jobs.

Burkle promised changes to Fresh & Easy that “will make it even more relevant to today’s consumer.” He brought on former 7-Eleven Chief Executive James Keyes to lead Fresh & Easy’s revamp away from Tesco’s effort at British-style retailing with unfamiliar brands and minimal service.

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