Tag: Lawsuit

The debris continues to fall in Chicago where earlier this week, the city saw all 15 Foxtrot convenience stores and two Dom’s Kitchen & Market locations suddenly close. Ex-employees have filed a class-action lawsuit against Outfox Hospitality, claiming they weren’t given proper notice of mass layoffs.

Protestors assembled Friday morning outside of Foxtrot’s commissary in Pilsen, but legal experts remain divided on whether Outfox will be held legally accountable. Earlier this year, unionized ex-workers at the Signature Room won their lawsuit that accused restaurant management of violating the Worker Adjustment and Retraining Notification (WARN) Act, a safe measure requiring companies to file a notice of mass layoff with the government. Eater reviewed an email sent to some ex-Foxtrot workers dated 11 p.m. Tuesday, April 23, and signed by Outfox CEO Rob Twyman notifying employees that their jobs would be immediately eliminated and stating the message was following state law. The letter does not mention the 60-day notice the law stipulates and came after the stores closed.

Outfox formed after Chicago-based Dom’s and Foxtrot combined last year. Foxtrot debuted as a delivery-only app in 2016 that expanded into the convenience store space opening locations in Texas, and the D.C. area. Dom’s debuted in 2021 in Lincoln Park. Both entities had major designs on scaling. In the aftermath of the closures, a Chapter 7 bankruptcy filing — which former employees told Eater to look out for — has yet to pop up, clouding the picture of what went wrong. Outfox hasn’t responded to media inquiries and former vendors tell Eater they haven’t heard anything from them either. They now join the graveyard of Chicago grocery brands like White Hen Pantry, Dominick’s Finer Foods, and Moo & Oink.

But as the legal theater begins to play out, workers are setting up online fundraisers and scrambling for jobs. In Chicago, the 17 potential real estate vacancies (liquidation could slow things down), are creating a feeding frenzy. Independent grocers, liquor shop owners, and would-be restaurant owners are contacting their real estate agents, hoping to cut deals with landlords on some prime retail spaces on the North Side.

Fresh Market Place in Bucktown is an independent grocer that’s become a champion of local vendors, where many chefs from Chicago’s top restaurants shop.

“I would, at the very least, I would listen to an offer,” Fresh Market GM Kostas Drosos says. “I definitely will inquire — or maybe I have inquired already.”

The demand for the Foxtrot and Dom’s locations contrasts with what’s happening on the West and South sides, where residents have clamored for more investment. The city has struggled to find a tenant in Englewood to replace Whole Foods. Locals seeking an upscale retailer with a similar cachet were rendered disappointed by the pending arrival of Yellow Banana, a division of Ohio-based Save A Lot. Some Chicagoans aren’t missing Foxtrot or Dom’s. You can’t miss what you never had.

Meanwhile, Fancy Plants Cafe owner Kevin Schuder spent much of the week trying to reach Dom’s and Foxtrot, hoping to connect them with the Great Chicago Food Depository. He’s had no luck, and his frustrations spiked after a Sun-Times report saying workers were instructed to throw away food. Drosos compares that to when Stanley’s, a tiny independent market on the corner of North and Elston Avenue, was razed in anticipation of the Lincoln Yards development. He remembers handing out business cards and hiring a few Stanley’s workers in the two weeks before its closure in 2019.

“Stanley’s put in notice two weeks out and said ‘Come on in, guys!’” Drosos recalls. “They were giving away the food — come in, we’re going to be closing and we’re giving discounts.”

Foxtrot and Dom’s shared some similarities, but it wasn’t a precise fit. Both wanted to attract upscale restaurant customers. They recruited chefs for cooking demonstrations and sold gourmet items with the chefs’ names. The latter was ripped from Trader Joe’s playbook. The concerns were detailed nicely earlier this month in an article by Adam Reiner in Taste.

But as Foxtrot raced for scale, with locations in high-rent areas like Fulton Market, execs may have skipped a step in establishing community roots, something Drosos says is integral to Fresh Market’s success. In Andersonville, Foxtrot attempted to open near Andale Market, a small independent shop that stocked specialty items from the kind of vendors Foxtrot desired. Locals pushed back.

That disconnect with Foxtrot and its community might be why Palita Sriratana says her sales at Fresh Market and Here Here Market exceeded her brand’s sales at Foxtrot. In November, her company Pink Salt was selected through Foxtrot’s Up and Comer competition, recognizing vendors selling new snacks, dips, and coffees — stuff Foxtrot wanted to scale and sell nationwide. Sriratana makes a Thai chili jam, which belongs in the same genre as chile crunch, David Chang be damned.

Sriratana describes the terms of winning as restrictive. They sounded like the stringent restrictions reality TV show contestants face; to be considered, candidates couldn’t already be in “major retailers.” There were “unrealistic” deadlines as Pink Salt geared up for the holiday gift-giving season — Foxtrot wanted enough jars of jam to stock at 54 stores versus the eight stores initially ordered. Sriratana says “she held her breath” and carried on with production. She says the system feels “predatory to a very vulnerable group of small makers.” Pink Salt is currently free from any restrictions.

“I feel sad for the brands that opened [production orders] and took out loans to meet their scale,” Sriratana says.

Here Here, founded in 2021, aimed to give vendors like Sriratana more control. Disha Gulati founded the startup in 2021 to give chefs including Rick Bayless and Stephanie Izard a digital marketplace for sauces, pasta, and spices, It allowed lesser-known names a chance to establish their brands nationally. Over the past few days, Gulati and Drosos have been inundated with requests from former Foxtrot vendors wanting shelf space. Both say they’ll expedite the process to help. Gulati says she spends much of her time connecting vendors so they could better share their experiences and succeed. She feels that’s why they feel a “strong sense of community on our platform.”

Garrett Sweet/Eater Chicago

Gulati was careful not to villainize Outfox, saying she doesn’t know what pressures they faced: “Them going under might have been inevitable,” she says.

But when discussing how Outfox closed without warning without informing vendors, Gulati says: “One hundred percent they should have done it differently.”

Justin Doggett has sold his Kyoto Black bottled cold brew coffees at Foxtrot since 2021 when the store reps approached him saying they wanted to stock his coffee. He never worried about Foxtrot reverse engineering his Kyoto-style cold brews: “It’s fairly unique, it’s a very niche product,” he says.

Foxtrot represented his biggest wholesale customer — all 15 Chicago Foxtrots stocked Kyoto Black. The sudden loss of the marketplace has forced Doggett to launch a campaign to grow his monthly subscription base, where customers would buy coffee directly from him. He says he’s had zero contact with Foxtrot since the announcement and feels blindsided.

“Their closure represents a loss of thousands of dollars of sales per month,” Doggett wrote in a Facebook post from Tuesday, April 23. “It also devastates my brand presence. People would order from me directly all the time because they first had my coffee at Foxtrot.”

Doggett says he made $120 in coffee deliveries on Monday. If this was in June, prime cold brew season, that delivery could have been larger. He’s looking for 800 new monthly customers; basically converting his Foxtrot customers to direct customers.

Some independent coffee shops, the same ones that Foxtrot sought to compete with, are helping out. Side Practice Coffee and Drip Collective have offered to sell Kyoto Black while Doggett adjusts. He knows that he won’t make up for the loss immediately. He also stressed that the workers he interacted with treated him well and shouldn’t be conflated with the corporate business.

History has repeated itself for Sriratana who has experience with start-ups suddenly closing; Pink Salt was also the name for her Thai food stall inside Fulton Galley, a food hall in Fulton Market. It closed in 2019, without warning, after being open for five months. The space — located less than a half mile west from Outfox’s headquarters — is now a Patagonia store.

“My experience with Fulton Galley made me not trust the partnership with Foxtrot and pushed me to really value independent businesses — I cannot stress that enough,” she says.