Taking Stock

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After 30 Months Of Ineptitude, Fresh & Green’s Withdraws From Baltimore-Washington Market 

Upon further review, it was doomed from the start. From the day in June 2011 that Canadian-owned Catalyst Capital Group elected to enter the supermarket business in the competitive Baltimore-Washington market to its announcement made earlier this month that it would be closing its remaining Fresh & Green’s six stores, this adventure could have been part of a newer version of the 1970s movie, “The Gang That Couldn’t Shoot Straight.”

First, Catalyst Capital and its Natural Markets Food Group (NMFG) unit significantly overpaid (more than $20 million) for what amounted to eight old and semi-dilapidated Super Fresh/A&P units. Unlike the other retailers who successfully bid at auction on other Super Fresh units (Village ShopRite and Shoppers Food & Pharmacy), Fresh & Green’s chose not to close the store for renovations.

At the time, Matt Williams who headed the NMFG unit for Catalyst Capital, told me that the stores were being kept open to maintain a level of continuity and build morale among the associates. He also said that Fresh & Green’s would be receiving a significant capital investment to upgrade all the units.

Well, as you might have guessed, Matt Williams is long gone from the organization and, as for the so called “significant capital investment,” it never happened. In fact, in my 40 years of following acquisitions and their ultimate fates, I can’t recall one that was worse than the F&G debacle.

If you can believe it, the stores are uniformly worse than when A&P exited the market in 2011. Except for the outdoor signage, most of the six remaining stores look very much like the crappy Super Fresh units did before The Tea Company put most if its Maryland stores on the auction block in early 2011. Some of the units have even retained that signature nasty smell that seemed to be part of the “A&P experience.”

Perhaps the best move that NMFG made was deciding to unload two of its most promising locations (40th Street in BaltimoreCity and Perry Hall) to Giant/Landover less than a year after they were reopened as Fresh & Green’s. The Toronto based organization recouped a lot of its initial investment with those two sales.

And there might be some post-ownership light at the end of the tunnel, with at least two of the properties (Arnold, MD and on 48th Street NW in WashingtonDC) certain to generate interest from other food retailers.

Even the troubled NMFG organization seems to have gained some new energy. The company hired former Giant/Landover president Robin Michel as its CEO 13 months ago and she inherited the Fresh & Green’s mess and is taking the company in a new direction.

After waiting a year, Michel elected to shutter F&G, stating, “Unfortunately, despite our best efforts, the stores remained unprofitable,” she noted. “We’ve reached the point at which continuing to operate these stores does not make financial sense for the company,” Michel added in a statement.

Michel also pulled the plug in July on Wilde & Greene’s, a hybrid restaurant and food market in Skokie, IL which was open for only about two years.

So, if you’ve spent any time at all with Robin Michel, you know she’s one of hardest-working, most demanding leaders and well-traveled executives in the industry. She’s also hired several former Giant/Landover and Ahold USA executives who worked with her during her 18 month tenure in Landover (Chris Paradissis, Shige Hatanaka, Paul Aguiar, Brian Shelton, Rick Hoffman) while some other former Giant/Ahold USA recruits – Bob Rosato and Tom Nazzaro – have already left Robin’s nest. Meanwhile, she’s been busy expanding the organization under its Mrs. Green’s banner.

Mrs. Green’s, which was founded in Scarsdale, NY in 1991 and sold while under bankruptcy (from then parent firm Planet Organic) to Catalyst Capital in 2010, consisted of about a dozen small organic food and wellness stores in the upscale Westchester, NY and Fairfield County, CT areas.

In the past several months, Michel has added new and larger Mrs. Green’s stores in: Wilton, CT; Hartsdale, NY; Calgary, Alberta (NMFG also operates seven small Planet Organic stores in western Canada); and most recently in Chicago.

Other Mrs. Green’s stores are slated to open shortly in: Dobbs Ferry, NY; Manhattan, NY (Hudson Street); Tarrytown, NY; New Canaan, CT; Princeton, NJ; another Chicago unit; and a new store in Fairfax, VA.

We’ve been told by several sources that the company is eyeing a future initial public offering (IPO). If true, that’s mind boggling, only because of the size of the NMFG organization, which currently consists of 14 small organic food stores, a large restaurant in Toronto (Richtree Natural Market) and the seven aforementioned Planet Organic stores in Western Canada.

None of the food stores individually are currently generating enough volume to be considered “prime time” and there’s just not enough heft for Wall Street to even give credence to a public venture (even though the parent company operates essentially as a hedge fund).

It’s a long road to the public markets, as witnessed by Fairway and Sprout’s, which are both doing considerably more volume and have established much stronger reputations with their customers. NMFG is years away from reaching that level of success and credibility (if it ever does).

So, the Fresh & Green’s era is over. Thirty months of abysmally poor performance by an operation with an operating model that might only be beneficial to business schools who could use it as a teaching platform about how to not to operate a supermarket organization.