Food Bazaar to Buy 2 Fairway Units as Others Close

Fairway Group Holdings, the one-time New York grocery icon that crashed in January under its second bankruptcy filing in two years, is nearing a deal to sell two of its remaining operating Fairway Market stores—and is in the process of closing all of the others.

Bogopa Service Corp., the Queens, N.Y.-based parent of the Food Bazaar chain and a runner-up in a bankruptcy auction for Fairway’s Manhattan stores earlier this year, has bid to acquire Fairway’s Red Hook, Brooklyn and Douglaston, Queens, stores, according to documents in Fairway’s Chapter 11 bankruptcy case. Those two stores were among Fairway’s assets that hadn’t drawn any bids in a March auction. Others—including Fairway grocery stores in Harlem, Stamford, Conn., Plainview, N.Y., and Westbury, N.Y.—have closed, or will close shortly, according to filed lease rejections, and state WARN (Worker Adjustment and Retraining Notification Act) notices.

Fairway has asked the judge overseeing the case to approve the deal with Bogopa as soon as this week. 

Bogopa, the upstart multiethnic grocer, is acquiring the units for little more than their equipment and inventory, documents show.

The Red Hook store—which opened to great fanfare 15 years ago—became something of a white elephant for Fairway. Although its setting in a restored waterfront warehouse providing views of New York Harbor, lower Manhattan and the Statue of Liberty was spectacular, its status as a destination was kneecapped after extensive flood damage from Superstorm Sandy in 2012 forced a monthslong closure, and a subsequent opening of Brooklyn’s first Whole Foods unit in the easier-to-reach Gowanus neighborhood in 2013 picked off many of its regular shoppers. A pricey rent at the unit, and subsequent competitive openings from Whole Foods, Trader Joe's and finally Wegmans in Brooklyn, also weighed on the Red Hook unit, Fairway said.

Bogopa has proposed taking over the unit, paying $5,000 for equipment and fixtures and an estimated $875,000 for inventory. It has also agreed with the store’s landlord on terms of a new lease for the store.

Bogopa has also agreed to lease adjustments with the landlord of the Douglaston store—a former Waldbaum's unit in the northwestern part of New York’s Queens borough that opened as a Fairway in 2011. Bogopa has agreed to pay Fairway a $100,000 base price for that store, along with an estimated $800,000 for its inventory.

The acquisition will bring a small measure of good news to union workers. Bogopa has agreed to take on no less than 90% of the current Fairway organized workforce while negotiating on a new contract.

Bogopa’s lively Food Bazaar stores are something of an ethnic cousin to Fairway—high-volume, fresh food-focused stores serving communities in and around New York. The company currently operates 26 locations, many in second-generation retail sites that previously failed, and several in so-called food deserts.

Fairway’s March auction resulted in five of its best-regarded units—those serving Manhattan, including its Upper West Side flagship—going to Village Super Markets, the Springfield, N.J.-based ShopRite operator and Wakefern Food Coop member. Village also acquired the Fairway brand name and will soon be the only entity using that name. Other units sold in the auction include Fairway’s Georgetown Brooklyn store by the Key Food Stores Cooperative. That unit is now operating as Foodway. Amazon acquired two closed Fairway stores in New Jersey that could eventually become a part of that company’s developing grocery concept.