It may not be the last dance after all for Foxtrot, the upscale Chicago-based convenience store and cafe chain that closed abruptly in April before filing for Chapter 7 bankruptcy.
Foxtrot co-founder and former CEO Mike LaVitola, backed by an investment group that purchased the chain’s assets in an auction last month, is planning to reopen about a dozen stores this summer, starting with the Gold Coast and Old Town locations in Chicago.
The new company is also planning to hire back displaced Foxtrot workers, wherever possible, to staff the stores, LaVitola said. Whether Foxtrot can win back its loyal customer base, remains to be seen.
“There’s a lot of work still to do, and of course, I wish the company wasn’t in this position,” LaVitola said Wednesday. “But it’s exciting to get the chance to hire back so many people here in Chicago, get all these products back on the shelf and re-jumpstart this great ecosystem.”
The return of Foxtrot seemed highly unlikely after the entire operation imploded this spring, leaving in its wake disappointed customers, a string of creditors and several lawsuits by disgruntled employees, who found themselves out of work with no advance notice.
The stores closed suddenly on April 23, four months after Foxtrot and Dom’s Kitchen & Market, another Chicago grocery startup, merged under a new corporate banner, Outfox Hospitality, ostensibly dashing high hopes for newfound synergies and continued expansion of both brands.
Foxtrot had grown to 33 locations, including 15 in Chicago, with the rest in Texas and Washington, D.C., when it shut down. Dom’s, a downsized neighborhood market concept launched in 2021 by longtime grocery executive Bob Mariano, had two Chicago locations and equally ambitious expansion plans.
Workers at all of the locations were immediately let go, some mid-shift, spawning ongoing lawsuits that their dismissals violated required federal and state warning notices.
Outfox filed for Chapter 7 bankruptcy May 14 in a Delaware court. The assets of Foxtrot were purchased at auction by Further Point Enterprises, a New York-based investment firm that had an early stake in the startup. The new owner bought the brand, intellectual property and technology — and an opportunity to revive Foxtrot — with a winning bid of $2.2 million.
Job one was reinstalling LaVitola, 37, who had been ousted as CEO by the previous company’s board in February 2023, as Foxtrot’s steep growth trajectory proved unsustainable in the post-pandemic retail landscape.
LaVitola said the rapid expansion he helped engineer, which essentially tripled Foxtrot’s retail footprint over the past four years, was too ambitious amid a more challenging economic environment, leading to the bankruptcy in April.
“By that time, I was no longer an executive at the company, so I can’t speak to exactly what happened,” LaVitola said. “My sense is just the company continued to have a very large overhead and despite it really resonating with consumers and having stores that were full, the overall company just was not profitable.”
LaVitola co-founded Foxtrot in 2014, based on a concept he developed while pursuing his MBA at the University of Chicago Booth School of Business. Launched as an online service, Foxtrot opened its first bricks-and-mortar store in the West Loop the following year.
A souped-up neighborhood convenience store with high-end local products, fast delivery and a cafe, Foxtrot developed a loyal following of customers who started their day with a breakfast taco and coffee, and stopped back for everything from cookies and ice cream to wine and craft beer.
Its one-hour delivery service also proved extremely popular during the pandemic lockdowns.
Foxtrot, which raised $174 million in total funding since inception, embarked on an aggressive expansion strategy under LaVitola as it emerged from the pandemic. The new Foxtrot will look to be smaller and more nimble, at least initially, LaVitola said.
“We had really ambitious growth plans, as a lot of people did at the top of the market in 2021 and 2022,” LaVitola said. ”But moving forward, it’s about doing it at a much more measured pace and really doubling down on all these local and small makers, which is really the backbone of the company.”
While most of the leases were terminated in the bankruptcy, Foxtrot is negotiating with landlords to reopen about a dozen locations in Chicago and Texas this year.
After getting the first batch of stores reopened and reestablished in the neighborhoods where they built a following, LaVitola said there’s still room down the road for expansion of the Foxtrot brand, including longer-term plans to move out into the Chicago suburbs.
Rightsizing the company is the right path forward from a business perspective, LaVitola said. Rebuilding the tarnished Foxtrot brand may be a taller task, however.
“Foxtrot has a lot of supporters, so I think they’ll see a very positive reception from customers,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management. “At the same time, I think people want an explanation as to what exactly happened.”
When the stores closed in April, it cut loose dozens of employees at Foxtrot locations across Chicago and other markets. That spawned several employee lawsuits challenging whether Outfox violated required state and federal termination warning notices.
The new Foxtrot owner is not a party to those lawsuits. But LaVitola said he is actively recruiting displaced employees to work at the reopening stores.
“As we start to really hire for stores and for store managers, we expect many of them to be familiar faces,” LaVitola said.
LaVitola has also been reengaging with local vendors, some of whom are creditors in the bankruptcy, and has found them receptive to being part of the new Foxtrot.
As for customers, LaVitola hopes they will return as well.
“It would be super naive to say that this wasn’t damaging for the brand,” LaVitola said. “It was incredibly sad the way that this all happened, and the way that it all went down, but at the same time, our stores were full to the end.”
rchannick@chicagotribune.com
