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Earth Fare and Lucky’s Market: What happens when two big organic grocers collapse?

Employees describe working in chaos, while local businesses are left with thousands of dollars in unpaid invoices.
Rachelle Roach, the wellness department director at the Seminole Earth Fare, finds empty boxes from stolen products while trying to organize the store during its liquidation sale. She said employees have been kept in the dark and working in chaos as the store's final days wind down. [SARA DINATALE | Tampa Bay Times]

Rachelle Roach knew something was wrong in the fall.

Roach, 59, runs the wellness department at Earth Fare in Seminole. She was starting to get calls from vendors asking where their money was. Roach didn’t know. Soon, her department’s credit was put on hold.

By late December, the problems started to cascade and employees were kept in the dark. One vendor came in the store to load his truck with his own bread, Roach said. She had a CBD seller in Colorado begging to have his hemp-infused oils shipped back if he wasn’t going to get paid.

Employees at Earth Fare watched organic market competitor Lucky’s Market fall. Not two weeks later, their employer toppled, too. Now both chains are in bankruptcy court.

“The shock waves in this industry, we are going to feel it for a long time,” Roach said. “This has never happened before. To have two big players close like this back to back?”

Florida had 35 total Earth Fare and Lucky’s Market locations. Their closures have created a hole in the specialty grocery market that other chains are eager to fill. But the transition won’t come without casualties.

Related: After closing all stores, Earth Fare files for bankruptcy

One national food distributor with a Sarasota warehouse that served Lucky’s and Earth Fare is out nearly $20 million, according to bankruptcy filings. Local businesses big and small — from St. Pete start-up Made Coffee to a Brooksville refrigeration company — are out several thousand to up to a half-million dollars in unanswered invoices.

“And we’re the collateral damage,” Roach said, referring to her coworkers.

At least 3,000 workers across Florida are soon to be out of jobs. Most are left hunting for new work while slogging through chaotic shifts during liquidation sales. They’re rushing to set up doctor’s appointments before benefits run out — if they haven’t already — and saying goodbye to coworkers that were more like family. Employees from both chains have filed lawsuits accusing their employers of violating the federal laws designed to protect workers during mass layoffs.

A closing sign inside the Lucky's Market in St. Petersburg. [SARA DINATALE | Tampa Bay Times]

***

Donna Edwards, who runs a Florida honey business, was still reeling from the news Lucky’s Market was filing for bankruptcy when she found out Earth Fare was shuttering its 50 locations nationwide as well.

Edwards’ honey pouches ship out from her family business in Polk County and travel across the entire state. Lucky’s and Earth Fare grew fast. So Edwards’ company, I Heart Bees, and dozens of other small Florida businesses grew with them.

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

Edwards said liquidators with Earth Fare blocked the doors at two locations in attempt to keep her son from taking back wooden honey displays that belong to her business. They made them themselves, branded with their logo.

“Owing me $11,000 wasn’t enough,” she said, "they wanted to actually sell my displays.”

Roach said while some vendors weren’t getting paid for their inventory, new products from other companies that were none the wiser were rolling into the store.

“From the big guys to the mom and pops, it’s like, who don’t we owe?” she said. “They all got duped.”

***

Nature's Food Patch employee Dinos Loukidis, Clearwater, arranges organic Pink Lady apples in the Clearwater store, Wednesday, February 12, 2020. [SCOTT KEELER | TAMPA BAY TIMES]

The sudden exit of Lucky’s and Earth Fare may make it seem like the organic grocery market is struggling. But the demand for fresh, prepared and specialty foods is still strong.

Retail expert Jeff Green called Earth Fare toppling so soon after Lucky’s an unfortunate coincidence.

“These investors,” said Green, who works as retail real estate consultant “all they want is return and forced them to grow too quickly.”

Lucky’s was backed by grocery giant Kroger, which pulled out from its majority stake in the company less than two months before the Lucky’s filed for bankruptcy. Earth Fare’s majority owner is Oak Hill Capital, a private equity firm.

Green predicts Sprouts Farmers Market and Publix’s new GreenWise Market will continue to perform well. Sprouts was already planning to open eight new stores in the state this year, including a new location in Seminole. Aldi, Publix and Winn-Dixie owner Southeastern Grocers have already bought up leases to many of the abandoned properties.

When the organic chains started exploding and supermarkets began carrying more specialty foods, Sean Balsley and his team at the independent grocer Nature’s Food Patch in Clearwater had to change their strategy. He focused on bringing the newest and most innovative products inside their two locations.

He said competition made them sharper. But he’s watched several health food stores call it quits, unable to keep up with the competitive pricing set by chains.

“I think some independents threw in the towel a little early,” Balsley said. “If they would have stuck with it, maybe they would have been fine.”

Now Balsley expects his deliveries to grow through Instacart without the other competitors. He’s also looking through a sudden surge of job applications — all from the three Earth Fares and Lucky’s Market that closed in Tampa Bay.

Customers selections are tallied at the check out in Nature's Food Patch, Clearwater. The local store's employee's have been handing out coupons to customers for their products outside the Seminole Earth Fare. [SCOTT KEELER | TAMPA BAY TIMES]

***

While some employees are looking for their next job, others are standing up to the corporations putting them out work. Laura Forsyth, one of the 89 employees laid off at the St. Petersburg Lucky’s, is the lead plaintiff in class action complaint against the grocer.

Two Earth Fare employees filed a similar lawsuit against that company. Both suits accuse the grocers of not giving employees the 60-day layoff notice required by law. They call for workers to be compensated for lost wages and benefits over that two-month period.

Earth Fare and Lucky’s both blamed changing retail trends and competition for their bankruptcies. Both have also made statements that their employees were properly given layoff notices under the Worker Adjustment and Retraining Notification Act, commonly called the WARN Act.

Forsyth declined to speak with a reporter through attorney Stuart J. Miller, who is representing both the Earth Fare and Lucky’s employees in the respective lawsuits.

“I’ve seen how this can devastates lives,” said Miller, who specializes in mass layoffs. “Even if some people get a job the next day, the vast majority are going to be deep in trouble.”

If the class action claims are certified by the judges in the bankruptcy cases, it will move employees and their missed wages up higher on the priority list of creditors to be paid back.

Most of Roach’s coworkers are either scared or angry. Roach wonders if her next paycheck will be deposited on time. Her last day might be Feb. 28, but she’s not sure.

“I’ve had to pull customers apart because they were fighting over products,” Roach said. “I’m exhausted.”

Most of the small businesses on the creditors list are writing off their unpaid invoices as a loss.

Mike Rideout, the founder of Made Coffee, lost 5 percent of his business the moment Lucky’s pulled out of its Florida stores. He had his full line of items in every Florida Lucky’s. He was supposed to have his products launch soon in Earth Fare, too.

Edwards, the Polk County honey supplier, jokes that maybe she’ll get back 10 cents of every dollar she’s owed two years from now when the bankruptcy cases are resolved. Both Rideout and Edwards have other big accounts, like Publix. They’re facing a setback, but are far from ruined. They know other vendors aren’t as fortunate.

Rideout said if an account of Lucky’s size collapsed when his business was just starting out?

“I would have lost everything," he said. “It would have bankrupted us.”

Editor’s note: This story has been updated to reflect the correct amount of business Lucky’s made up of Made Coffee.

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