Foxtrot's new owners look to rebuild community trust after abrupt closures left many stunned

Selling her cookies in Foxtrot was a badge of honor for Laura Shafferman, founder and owner of Legally Addictive Foods.

She loved Foxtrot’s model: an upscale grocery store that provided a highly curated selection of prepared food, grocery items and drinks, like coffee and wine. She said her cookies — made with crackers, toffee, chocolate and sea salt — saw a tremendous amount of visibility at the stores and at Dom’s Kitchen & Market.

Shafferman said those stores were “how a lot of people discovered our product.”

But when the grocers abruptly shuttered, it surprised many of their vendors like Shafferman, who is based in North Carolina, and Chicago-based companies such as Kyoto Black and Onigiri Kororin. Even employees and customers had been left in the dark.

Foxtrot and Dom's merged in November 2023, becoming Outfox Hospitality, and then abruptly closed all their stores in April. Outfox filed filed for Chapter 7 bankruptcy in May.

Shafferman, based in North Carolina, had read about the closures on the popular food and drink Substack Snaxshot. But she thought it was a few low-performing stores that were closing, not all of its 33 locations in Chicago, Texas and Washington, D.C.

“Losing [Foxtrot] … it really sucked. It was really disappointing,” Shafferman said.

But Foxtrot is now making a comeback after New York investment firm Further Point Enterprises purchased the company’s assets in May at an online auction for an estimated $2.2 million. Further Point brought in some key players from the old company, including Foxtrot co-founder Mike LaVitola as chairman.

It reopened Foxtrot's Gold Coast store on Sept. 5, and the Old Town location opened Thursday. There are plans to reopen more sites in Dallas and Austin, Texas.

Rebuilding trust among vendors and customers is an obstacle as Foxtrot looks to revive the brand. The grocer must also renegotiate leases, obtain new licenses and grow its staff as it returns to market.

Eliana Crosina, assistant professor of entrepreneurship at Babson College, said one opportunity "new owners face revolves around deciding what to hold on to and let go of the prior organization. This includes finding ways to help leaders salvage from the 'defunct' firm and mourn their loss as a means of finding continuity."

Planning a return

LaVitola said excitement for Foxtrot grew in 2021 when it raised $100 million in funding. That’s when Foxtrot began to hire outside executives to “professionalize” the company, he said during a virtual event this month hosted by the Executives’ Club of Chicago.

When Foxtrot and Dom's announced their merger in November 2023, LaVitola was to stay on in adviser and board roles. He said Foxtrot shifted away from its founding mission as private equity and venture capital firms prioritized the need "to be profitable immediately."

“We were all about curation and simplification and having these really high-touch experiences,” LaVitola said. “I think the company went to … really degrading the quality ... of what customers were seeing in store, and candidly, just losing that specialness.”

He said the store closures were abrupt and “a really, really poor way” to treat employees, vendors and investors.

Former Dom's and Foxtrot employees filed a class-action lawsuit in April, saying the grocers broke state and federal law by failing to properly notify employees that they would be laid off. Workers at Foxtrot Commissary in Pilsen also held a rally that month to demand 60 days of back pay, which they say hasn't been paid yet. Some vendors were also left with unpaid bills. Shafferman said Legally Addictive was out $25,000 when cookies Foxtrot ordered sat unused in a distributor’s warehouse.

Outfox indicated in its bankruptcy filing that once administrative costs are paid, there would be no money left to pay unsecured creditors.

While Foxtrot is under new ownership, Dom’s assets were not purchased at auction, Crain’s Chicago Business reported, and its stores won't reopen. North Carolina-based Fresh Market will replace Dom's Lincoln Park site, according to building permits.

David Magruder, Further Point’s managing partner, who is serving as interim chief financial officer and Foxtrot board member, said the closures were "a shock to the whole system. What happened was not right, in some sense."

When the company started its hiring push, it targeted former employees first, and Magruder said most of its managers are former employees.

“We recognized an opportunity to bring people on that were affected and try to really support as much as we could,” he said.

Each store requires 25 to 30 employees, along with new food and liquor licenses. It will also need to pass its health inspections again, according to LaVitola. And the pace of reopenings will depend on the leases, which have to be renegotiated with each landlord.

Still, Magruder hopes the company can reach its original projection of reopening about 12 stores, including in Texas.

“We have a good core signed up and leased and ready to go,” he said. “It’s just a matter of getting product back in, getting people hired back and permits.”

Rebuilding brand trust

Socorro Montoya, a former cook at Foxtrot Commissary, said she's been struggling to find full-time work after she was laid off. The commissary was where operations such as food assembly and labeling took place and where the company’s drivers were based.

“I was very surprised and sad,” Montoya said, speaking in Spanish. She’s been working part-time and said a former colleague she knows is still unemployed. Montoya said it’s a good thing Foxtrot is reopening, and she’d consider going back to the company.

The fallout is “nowhere near completed” for former workers, said Jose Uribe, an organizer with workers rights organization Arise Chicago, which has been supporting the commissary workers. The organization helped workers file charges with the Illinois Department of Labor, whose investigation continues.

“[Foxtrot] did a lot to erode confidence among consumers and among present and future workers,” Uribe said. “I would not be surprised to hear from personnel, whether it's new personnel or people who worked with them in the recent past when they made the announcement to close, … that they do feel uncertain and tenuous and perhaps even suspicious or guarded as far as the [new] company's intention and vision for their future.”

Shafferman isn't sure how the new Foxtrot plans to rebuild trust, especially with vendors.

“They're starting all over again and not with a good track record,” she said. “Other than carrying our product on the shelves, I don't know what else I would want. … I know that the product sells there really well. If I was an employee, a staff member, I would probably feel very differently.”

LaVitola said Further Point doesn't have access to Foxtrot's old invoices, which would outline how vendors were impacted, but conversations proved that “vendors were hurt." He said the return of employees like himself helped vendors regain confidence in the brand.

Magruder said most of its vendors are returning, including longtime partners like coffee roasters Kyoto Black and Metric. Shafferman's Legally Addictive cookies are also back at Foxtrot.

The stores are also offering an expanded breakfast and lunch menu as well as new items like paninis, salads and bowls.

Foxtrot is going to focus on its core fleet of stores and its mission of promoting local brands, Magruder said.

“That's the overall theme, really: the community. And bringing them back in to be excited about small local businesses, and how many vendors we can support doing so,” he said.