Local Focus Seen as Key to Earth Fare’s Comeback

Mark Hamstra | 19 Oct 2020

Earth Fare, under new ownership after filing bankruptcy and shuttering all of its locations earlier this year, has been quietly reopening stores for the last few months.

Asheville, North Carolina-based Hulsing Enterprises led the acquisition of a handful of Earth Fare locations and its trademarks in March, in partnership with the chain’s founder, Roger Derrough. Derrough launched the retailer, also based in Asheville, in 1975, as a single natural foods store called Dinner for the Earth. It grew to 26 locations before being acquired by private equity firm Oak Hill Capital Partners in 2012.

“The great thing about them reopening is that the original owner is involved again, and that’s about as authentic as you can get,” said Jeffrey Landsman, owner and president of at Towson, Maryland-based Specialty Food Sales.

Landsman said Earth Fare occupied an important space in the natural segment, with stores that appeared familiar to mainstream shoppers and were not as upscale as Whole Foods. Importantly for the natural segment, the stores also had knowledgeable staff, he said.

“Design and decoration don’t really do much for me,” said Landsman. “I want to see what they sell and what their people know, and they had really good people.”

According to local reports, many of the former Earth Fare staff have returned at both the store and management levels.

Earth Fare could not be reached for comment. On its website, Earth Fare said it was committed to reopening stores across the Southeast and to its philosophy of offering clean, healthy food.

The retailer has reopened 13 locations, according to its website, mostly in Virginia and the Carolinas, but it has also reopened one store each in Florida, Georgia, and Michigan. A scattershot approach to new-store development contributed to the company’s previous downfall, according to Landsman and others in the industry.

Under Oak Hill’s ownership, Earth Fare had more than doubled in size to 55 far-flung locations in what some said was a poorly executed expansion strategy that placed stores in poor locations and drained cash.

 “I think they were expanding for the sake of expanding,” Landsman said. “The stores were all over the place, and there was no rhyme or reason for where they were.”

Jay Jacobowitz, owner of consulting firm Retail Insights, Brattleboro, Vermont, said he expects that the stores that are reopening “are the few with better historical performance.”

“One of the chronic problems we observed with Earth Fare was its relatively lower-quality real estate choices, making its premium natural organic assortment less likely to resonate with households in those trade areas,” he said.

Jacobowitz said Earth Fare also appeared to lose its identity under previous ownership, as reflected in its product mix.

“It is perfectly legitimate to offer a less strict ingredient standard than, say, Whole Foods Market—see Amazon’s latest hybrid model in Woodland Hills, California—but Earth Fare’s strategic problem, post-venture capital investment, was its schizophrenic wavering between premium natural organic and whatever ingredient standard Coca-Cola represents,” Jacobowitz said.

Industry consultant Tim Sperry of The Tim Sperry Group said he believes Earth Fare can succeed in its comeback effort by focusing on local sourcing and meeting the demands of local consumers, rather than trying to emulate traditional supermarkets.

“They need to be grounded in their communities and endeavor to offer service and products that meet customer’s needs and support a regional supply chain,” he said. “Support local famers. Showcase products developed in their region. You have to understand your competition, but at the end of the day, be who you are and who you want to be. Otherwise you are just another grocery store.”

After several months of disruption during the pandemic, consumers are looking for retailers that will be stable and reliable, with in-stock positioning on the products shoppers expect to find, Sperry said.

Earth Fare’s biggest challenge will be maintaining its focus on being a strong regional player, rather than trying to be everything to everyone, he said.

Sperry also cautioned that the company should seek to ensure that it has the right investment partners.

“Accept capital offers from players who want to be part of the business you are growing,” he said, rather than from companies with purely financial goals.

Landsman agreed.

“I am excited to see them come back, and I hope they pay more attention to the products, the services and the locations, rather than just try to open up a whole bunch of stores and then sell it off,” he said. “Hopefully they are in business to be operationally profitable, and not transactionally profitable.”

The new owner has a history of buying hotels, fitness facilities and other properties and renovating them. Hulsing Enterprises has also invested in Food Matters Market & Café, which operates two locations in Brevard and Morganton, North Carolina.

Related: Earth Fare To Open NC LocationsEarth Fare Locations Open Under New Ownership.