The grocery store sector has faced several challenges since the Covid-19 pandemic in 2020 forced many operators to reduce store occupancy levels to 20% to 50% of their capacity to meet social and physical distancing requirements.
The lower occupancy requirements led to reduced revenue for stores as many consumers turned to online retail shopping instead of waiting in lines to get their groceries.
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Since the pandemic subsided, stores have faced other financial obstacles such as rising inflation that has increased costs for food and other merchandise, increased labor costs with rising minimum wages, and higher interest rates on their debt.
Related: Distressed retailer closes more stores in Chapter 11 bankruptcy
Smaller grocery chains also face increased competition from big-box general merchandise retailers like Walmart (WMT) , Target (TGT) , and Costco (COST) that sell a wide variety of products, including groceries, at low prices.
Financial challenges have led grocery chains to close underperforming stores and in some cases file for Chapter 11 or Chapter 7 bankruptcy.
Foxtrot Market and Dom's Kitchen & Market, which operated 33 stores in Chicago, Washington, Dallas, and Austin, Texas, abruptly closed all of its stores in April 2024. The grocery chain's parent Outfox Hospitality subsequently filed for Chapter 7 liquidation in May.
Foxtrot's co-founder Mike LaVitola, who was not involved in the closing and Chapter 7 bankruptcy, led a group that in September reopened two Foxtrot locations.
Regional grocery chain Stop and Shop, owned by Ahold Delhaize, in July said that it would close 32 of its 397 stores located in Connecticut, Massachusetts, New Jersey, Rhode Island and New York .
"The value proposition and pricing at Stop & Shop are simply not strong enough,” Ahold Delhaize USA CEO JJ Fleeman said before revealing the store closings.
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Choice Market ceases operations
Finally, Denver-based upscale grocery chain Choice Market has ceased operations permanently after failing to restructure its business, the company's CEO said in an Oct. 7 statement on LinkedIn.
Related: Popular restaurant chain operator files for Chapter 11 bankruptcy
The debtor's decision to close down came three days after it filed a motion on Oct. 4 in the U.S. Bankruptcy Court for the District of Colorado in Denver to convert its Chapter 11 case to Chapter 7 liquidation.
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"This is a tough post to write but after several months of working through a potential reorganization, unfortunately Choice is closing its doors for good," Choice Market's CEO Mike Fogarty wrote in a LinkedIn post. "I want to thank every investor, employee, supplier, friend and family member who believed in me and our mission of making good food a little more convenient."
Choice Market Holdings originally filed for Chapter 11 protection on May 6, 2024, seeking to reorganize its business and secure new financing after failing to recover from the Covid-19 pandemic.
The company, which was established in 2017, had planned to transition away from its upscale urban grocery stores and sell off all but one location, while focusing on small-format mini-mart locations. The company expected to launch its new direction in six to nine months, Fogarty told C-Store Dive in September, but the company's plan failed, and it decided to end operations.
The company had suffered from rising costs of goods and labor as inflation increased prices, which it could not overcome.
The Denver-area grocery chain combined quick service, user-friendly technology, and healthy and practical products, according to its website. The grocery chain had grown to five locations last year before running into severe financial distress and shutting down.
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