1. News
  2. /
  3. Business

After abrupt Lucky’s Market exit, what happens to its Tampa Bay stores?

Lucky’s is closing 32 stores and had 19 planned that it never opened. Publix and Aldi aren’t buying local stores, so who will?
Lucky's Market in St. Petersburg just ahead of its grand-opening two years ago. [Times (2018)]
Lucky's Market in St. Petersburg just ahead of its grand-opening two years ago. [Times (2018)] [ EDELHEIT, EVE | Tampa Bay Times ]
Published Jan. 29, 2020
Updated Jan. 29, 2020

Lucky’s Market still has active construction permits in Clearwater for a store that was supposed to open on Gulf to Bay Boulevard.

Then communication fell off while planners were in the process of approving store signs, according to city’s development office. Residents noticed a construction lull and banners that said “opening soon” disappeared.

Just over a week ago, a Facebook user posted to Lucky’s page asking when a store under construction in Brandon would open. Lucky’s responded by saying there “wasn’t one at the moment.” Now, there won’t be one ever.

Lucky’s — the store known for its cheap organic produce and for serving beer to sip while you shop — announced last week it was pulling out of Florida, with the exception of one location in Melbourne. This week, the chain filed for bankruptcy.

Just two years ago, Lucky’s was an aggressive leader in a wave of specialty grocers putting down stakes in Florida. Its abrupt departure could signal the Sunshine State is experiencing a glut of shopping options in some areas. And that spell uncertainty for what comes next for the three soon-to-be-abandoned Lucky’s Markets in Tampa Bay — two of which were still under construction.

Aldi and Publix are planning to purchase 11 of the Lucky’s locations, none of which are in Tampa Bay.

Related: Lucky’s Market to sell 11 stores to Aldi and Publix as it files for bankruptcy

Lucky’s has said its Florida stores will close over the next couple of weeks and that none of the announced stores will open. In total, Lucky’s is closing 32 locations and abandoning 19 stores that were planned or under construction. The seven remaining stores are being sold to a new company spun off by the chain’s founders.

Developers and landlords who thought they had a safe bet on Lucky’s are now desperate to fill the remaining spaces Aldi and Publix aren’t taking over — spaces they had invested hundreds of thousands of dollars in designing and building specifically for a Lucky’s Market.

“They’re upset,” said Noah Shaffer, senior director for Tampa’s Confidant Asset Management, “because they’re halfway through building that space, allocating all that money to do it.”

Construction records show the developer of the Clearwater store estimated its end of the project costing $300,000.

Lucky's Market in St. Petersburg is already has empty shelves because of its liquidation sale. Shoppers say the store has even run out of bags. [Times (2018)]
Lucky's Market in St. Petersburg is already has empty shelves because of its liquidation sale. Shoppers say the store has even run out of bags. [Times (2018)]

Lucky’s quick rise and fall

In 2016, national supermarket leader Kroger decided to start investing in Lucky’s as a way to insert itself into Publix-dominated Florida.

Kroger helped double the Colorado-based chain’s footprint and brought its Florida store count to 21. Lucky’s opened its St. Petersburg market by Tyrone Square mall in 2018 and soon announced the two other Tampa Bay locations, in Brandon and Clearwater, as part of its rapid expansion.

It was unknown then just how much of a stake Kroger had in Lucky’s. Court records filed this week now give a clearer picture: Kroger had a majority stake in Lucky’s at 55 percent and was backing 31 of Lucky’s leases.

In December, Kroger pulled out of what it had long called a “strategic partnership” after not seeing enough return on investment.

"(Kroger) has a strict business model,” said Jason Donald, a managing director with commercial real estate services company Cushman & Wakefield. “They don’t throw good money after bad … you take your lumps and move on.”

Bankruptcy filings show Lucky’s had several locations that were turning low or no profit. Sales had also dipped 10 percent in the year-over-year period ending at the start of January. In the documents, Lucky’s said the leases it is trying to sell are for stores either surrounded by other grocery competitors or that were too costly for the chain to operate.

Related: Grocer games: Will it be Sprouts or Lucky's that comes out on top

Lucky’s began to expand in Florida at the same time as several other specialty chains with private labels that promised savings. Trader Joe’s kicked off the craze and Lucky’s and Sprouts Farmers Market soon followed. Earth Fare, another organic-focused store, has also grown its local footprint. Whole Foods, now a veteran organic chain, is in the midst of developing a bigger, better version of its Tampa store.

“I think it was timing,” Donald said. “They tried to do it on the heels of Trader Joe’s, Sprouts, but it was too hard to carve out their piece of the pie at this point.”

What happens to an unfinished grocery store?

The western portion of the former Kmart store on West Brandon Boulevard near the intersection of Lakewood Drive had been razed to make way for a Lucky's Market at the center. [TIMES (2018)]
The western portion of the former Kmart store on West Brandon Boulevard near the intersection of Lakewood Drive had been razed to make way for a Lucky's Market at the center. [TIMES (2018)]

Publix confirmed it is in negotiations to take over five Florida Lucky’s stores: in Clermont, Naples, Neptune Beach, Ormond Beach and one on Orlando’s S Orange Avenue. Lucky’s said Aldi is in negotiations to take over six of its stores: in Coral Springs, Oakland Park, Sarasota, Vineland, Venice and one on Orlando’s Colonial Drive.

Bankruptcy documents say that up to 26 total store leases have interested buyers, but did not specify locations.

Lucky’s court filings show it also had a lease secured for a store in Riverview it hadn’t announced yet — though the filings don’t specify its address.

Tyrone Square plaza was usually crowded by Lucky’s Market shoppers, sometimes making it difficult to find parking. Shaffer, the Tampa broker, said the spot might be enticing enough for Earth Fare, which tends to open near heavily trafficked areas like malls, or Trader Joe’s. Both chains have other locations within a 20-minute drive of the Lucky’s store.

The property and mall owners did not return a request for comment.

The local brokers told the Times the St. Pete Lucky’s is likely to be taken over by another grocery store. But they said the two suburban properties that were mid-construction are still blank enough slates to suit several different business types from doctors offices to hardware stores. They could also be split into smaller spaces without much extra cost, rather than the 30,000-square-feet Lucky’s required, to suit different client types.

A former Kmart was bulldozed to make way for the planned Lucky’s on W Brandon Boulevard. The would-be Lucky’s shares a plaza with a Crunch Fitness, Chuck E. Cheese and Bealls Outlet. But there are two existing Aldi stores within 2 miles and a Publix even closer.

At the same time, the existing lease agreements with the other tenants could make it tough to bring in some businesses. Shaffer said, for example, Chuck E. Cheese’s lease restricts most other entertainment-driven businesses from opening there. The property is owned by Ohio’s Site Centers Corp., which did not respond to a request for comment.

Tampa’s Greenleaf Capital was in the midst of building the Clearwater plaza with Lucky’s as its anchor and a few other smaller storefronts. The same property housed the Albertsons store that closed in 2015. But it, too, has competitors nearby: Sam’s Club, Publix, and Walmart Neighborhood Market are all less than a mile away. Greenleaf did not return a request for comment.

Lucky’s said in a statement it “continues to have active dialogue with various buyers.”

Shaffer, who spends most of his day working with landlords, sympathized with the property owners and developers, who likely hadn’t collected their first rent check yet from Lucky’s. A handful of Lucky’s top creditors are Florida landlord and construction companies.

“It’s tough,” Shaffer said. “It stresses the importance of monitoring the tenant and what they’re doing at the national level. Few take that deep of a dive."

Shaffer wonders if any landlord thought to ask Lucky’s about its standing if Kroger bowed out.