Earth Fare, a natural and organic grocery chain, has announced the closure of all 50 of its stores effective immediately, citing an inability to refinance debt.
The chain filed Chapter 11 bankruptcy with the U.S. Bankruptcy Court in Delaware on February 4, just one day after they announced plans to close stores, sell off all assets and go out of business. In the filing, Earth Fare reported both assets and liabilities of $100 million to $500 million. Five creditors are owed more than $5 million.
"Earth Fare has been proud to serve the natural and organic grocery market, and the decision to begin the process of closing our stores was not entered into lightly. We'd like to thank our team members for their commitment and dedication to serving our customers, and our vendors and suppliers for their partnership," the company said in a statement.
The closure illustrates the many challenges faced by small and regional grocery chains, who face stiff competition from larger brands such as Walmart and Amazon.
"The outlook for small and regional grocers is becoming increasingly challenging in a rapidly changing digital food retail landscape," Kelly Bania, analyst at BMO Capital Markets, wrote in a research note to clients.
An inability to refinance debt
The first Earth Fare opened in 1975 by a man named Roger Derrough, who wanted to open a store with a strict natural Food Philosophy. The Asheville, North Carolina-based chain was the first major grocer to ban high-fructose corn syrup and at one point had more than 54 stores across the Southeast, Midwest and Mid-Atlantic.
In addition, the chain implemented several strategic initiatives designed to enhance customer experience in the past few years. One of these programs, “Live Longer With Earth Fare,” aimed to empower customers to take back their health through their food choices.
"While many of these initiatives improved the business, continued challenges in the retail industry impeded the company's progress as well as its ability to refinance its debt. As a result, Earth Fare is not in a financial position to continue to operate on a go-forward basis. As such, we have made the difficult, but necessary decision to commence inventory liquidation sales while we continue to engage in a process to find potential suitors for our stores," the company said.
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