Ron Burkle Speaks on Fresh & Easy's Bankruptcy
EL SEGUNDO, CA – Though Fresh & Easy has struggled since coming out of its first Chapter 11 bankruptcy, the chain’s owner Yucaipa Companies, LLC, founded by renowned investor Ronald W. Burkle, decided to take on the challenge.
"[Tesco] decided to literally give us and the team half the company to see if we could save the jobs and their investment," Burkle wrote to the Los Angeles Times.
Burkle, who became a billion dollar investor due to sharp skills in the supermarket circuit, and his company acquired Fresh & Easy in 2013 with the idea of bringing more affluent shoppers to the chain and changes that would make it “more relevant to today’s consumer.”
Now, two years later, the chain is back in bakruptcy.
While analysts told the L.A. Times that Burkle’s Yucaipa Cos. underestimated the amount of investment and the level of competition in the market, Burkle told the publication that it was something he considered significantly before investing both his company’s time and reputation into trying to turn the stores around.
“Yucaipa did not commit sufficient capital on Fresh & Easy,” Burt Flickinger III, Managing Director of consulting firm Strategic Resource Group, told the Times. “Yucaipa bought the stores at a favorable price and thought they could operate them profitably, but it takes significant investment.”
Burkle countered in his writing, however, that the investment was simply too great. "The business was in a free fall. Turnarounds are tough, and falling knives are tougher yet."
Now the retail chain is closing its doors by the end of the month, a sharp turn after having only filed for its second Chapter 11 bankruptcy at the end of October.
While the situation is not the happy ending the company might have first envisioned, Burkle wrote that it wasn’t without effort and is a disappointing outcome.
"The chance would never come again to build something from an infrastructure like they had created," Burkle wrote. "In many ways, Fresh & Easy was a great opportunity to bring a new format to the market."
AndNowUKnow will continue to follow the story as it unfolds further.
