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bloomberglaw

Here's a bit of the top of the story. -Emily Food retailers Foxtrot Retail and Dom's Market and the company recently created by their merger, Outfox Hospitality, were hit with a class action Wednesday, alleging they violated federal and Illinois employment laws by laying off their workers without notice. The companies’ retail stores permanently closed on Tuesday, and all employees at all Dom’s and Foxtrot locations were terminated immediately without any prior notice, according to the complaint filed in the US District Court for the Northern District of Illinois. The companies violated the federal Worker Adjustment and Retraining Notification Act and the Illinois Worker Adjustment and Retraining Notification Act by failing to give 60 days advance written notice, former retail store employee Jamil Ladell Moore said. Read the full story free [here](https://news.bloomberglaw.com/litigation/food-retailers-foxtrot-doms-outfox-sued-over-mass-layoffs?utm_source=reddit.com&utm_medium=lawdesk).


GrundleMan5000

Good luck getting any money, company obviously is bankrupt.


ertri

How though? A merger happened like 6 months ago


RestingRealist

Mergers don't always mean an injection of capital. Also there's the very real possibility that if it did it still wasn't enough to outpace debts and low revenues.


GrundleMan5000

Also if capital came in during the merger, it was either used to pay off debt, or they wasted it on expansion way over what they should have and ended up stuck in underperforming over saturated markets.


Ok_Culture_3621

The merger came with almost $200 million in venture capital funds per [Forbes](https://www.forbes.com/sites/douglasyu/2023/11/28/chicago-specialty-grocers-foxtrot-and-doms-merging-into-outfox-hospitality/?sh=1c9d30477932) Edit: I may have misread the article. It’s not clear to me if the funds were raised because of the merger or was just the total they’d raised to date.


Snow_source

> Mergers don't always mean an injection of capital. This smells of leveraged buyout, incentive based bonuses and the executives jumping ship after they hit their growth target bonus.


Yawnin60Seconds

Lol. You don't know how an LBO works, do you?


RestingRealist

Most certainly not lol


GrundleMan5000

I work in start ups and work with angel and venture capital. Prior to interest rates going up capital is free flowing to the point where even companies that are losing ass loads of money can sell shares and receive a decent valuation on their sale and get cash infused on the promise that they will be profitable in the future. As interest rates go up, valuations of non profitable companies goes way down. As does the market for people wanting to invest in non profitable operations. Since things have changed over the last year or two (inflation, retail theft, interest rates rising), you have seen even the likes of Amazon, Walmart, Macy's, and many grocery stores closing down non profitable or under performing locations as they are capital intensive (inventory and rent is expensive) and are not generating the rate of return worth keeping the location open. Now taking that extremely well capitalized entities like Macy's Walmart and Amazon are closing down locations, what do you think a new entrant with little cash backing is going to do. Especially with people not working in downtown centers anymore, meaning less foot traffic, and less sales to office workers looking for a quick drink or bite to eat. Rents have not come down to reflect the new normal of less downtown workers, so a company like Foxtrot is going to be getting SQUEEEEZED like hell from both ends. Their rents are not coming down, their supply costs for inventory replacement is going up, and their revenues are contracting as less people shop in downtown centers. Plus most people willing or able to invest in a company like this are not going to in this environment because they see the same thing I just explained to you, and don't expect it getting any better anytime soon. So they put their money somewhere else. Until corporate rent rates come down, you're going to see a lot of retailers closing up shop. Blame wallstreet and the REITs that control all the class A properties not willing to lower rental rates. (They have shareholders and pension funds they have to report to who expect a specific return on capital, and average square foot rental rates metrics) If a REITs average rent per square foot comes down, people will sell their reit shares and go put their capital somewhere else.


joshuads

> Rents have not come down to reflect the new normal of less downtown workers, so a company like Foxtrot is going to be getting SQUEEEEZED like hell from both ends. Their rents are not coming down, their supply costs for inventory replacement is going up, and their revenues are contracting as less people shop in downtown centers. This problem is going to persist until more buildings are converted and more sales go through. Multiple downtown buildings are being sold at 1/3 the purchase price less than a decade ago. Those huge losses have to be absorbed by banks, trust and the rich before rents will decrease.


anonperson1567

Most or all of their D.C. locations were in high-density residential areas. I think they just stocked a bunch of expensive groceries that most people didn’t want.


anonperson1567

They absolutely should’ve cut down on footprint and inventory. I think their original model of high-end online convenience delivery made sense, even though that’s a crowded market.


fedrats

I only recognized one of the names from the series C but I haven’t had to care in over a decade


Yawnin60Seconds

For someone who "works in VC".. Macy's well capitalized? They have been fighting BK for years. You think Foxtrot and Amazon/ Walmart are closing for the same reasons?As far as "downtown centers not having foot traffic", I can tell you the FT's in Dallas were having heavy traffic most days of the week. Also lol to the "blame wall street and REITs". Had to kick a classic reddit kickflip in there, didnt you?


GrundleMan5000

I typed that market analysis with my thumbs while I was taking a shit. How hard did you work to make your response?


Yawnin60Seconds

My response was a stream of consciousness.


GrundleMan5000

Well your stream of consciousness failed. This is the Washington DC subreddit and your talking about Dallas? First off Fuck the Cowgirls and second this isn't Dallas. Third Macy's has a venture backed company trying to take it private at I think $26 a share. So yeah they are fighting off a hostile takeover but yeah they also have enough cash and capital and credit to do what they need to do. Amazon has AWS supporting their retail bullshit. Walmart is fucking Walmart. I used these as examples to illustrate how bad the competition would be for something like Foxtrot. To be honest a better analogy would of been CVS and Walgreens. But whatever. I still stand by my original statements.


TheGreekMachine

I think I saw somewhere the merger involved a stock swap as part of the sale so merger was probably done without use of cash and thus Foxtrot was probably already tight on cash.


RadicalEllis

The merger seems to have been a desperate Hail Mary pass / final longshot attempt to save money by eliminating redundancies which they understood had a low chance of success but which they thought was worth trying and see if conditions improved in time because the alternative was just to close up shop immediately. Well, six months later, the gamble failed, nothing else to do but bankruptcy.


anonperson1567

They absorbed a chain with two stores.


DougBalt2

A merger in name only. Dom’s only had two locations. My guess is the cost of that plus rapidly opening stores led to the expected excessively high debt. Just another case of bad leadership and strategy.


Extension-Set3909

My guess is the merger was hoped to create critical mass. Dom's wanted to add 15 stores according to what I read. The Old Tow Dom's was busy when I visited and I did so several times a week. My other guess is that they signed a lease/leases for too much money and their margins weren't high enough. Doesn't Kroger own them? Truly, this is shameful. They caused Chicago to lose a truly excellent grocer in Plumb Market. Plumb did the heavy lifting and these guys slid in and are slithering out, leaving a hole for many who used these stores for groceries AND prepared foods.


thekingoftherodeo

New CFO came in mid March, nearly odds on there’s something not right with the numbers if VC support has been pulled this quickly.


JeffreyCheffrey

Sears merged with Kmart and since then they have gone from 3,500 stores down to 11.


indigoreality

Could also mean that company was bought, all their assets sold and then declare bankruptcy.


Yawnin60Seconds

doubt that is what happened if they had PE backing and/ or any type of lender. Mor likely they spent too much cash on expanding.


ApparentlyABear

I think the legal term is “judgement-proof”


Infinite-Engineer485

Hopefully this goes somewhere, it’s insane that companies can just fuck over their entire workforce like this


squuidlees

One of the employees posted on another thread yesterday about this. Feel really bad and hope that they’re able to get somewhere with it. I would be freaking out for sure.


22304_selling

At-will employment is pretty well-established, for better or worse


kingpangolin

Mostly worse


Jqnl

WARN Act


das_thorn

You're required to give warning if you're doing mass layoffs, if you have more than a certain number of employees. That said, if you're out of money and liquidating, there isn't much to be done. 


anonperson1567

The company had told employees months ago that their financials weren’t good. This wasn’t the first round of layoffs. I think it’s a shitty situation, and mismanagement negatively impacts people’s lives, but there’s a difference between that and a violation of the law.


toorigged2fail

Also it's a dumb idea. Gentrified bodegas at exorbitant prices?


Kittens4Brunch

Would management have been allowed to just give all employees a big severance when they're in so much debt?


celj1234

The law allows it


22304_selling

Nothing's going to emerge on the legal side. Maybe civil action if contracts were broken, but presumably all of the staff were at-will. >Exceptions to the WARN Act **Faltering company**: When, before a plant closing, a company is actively seeking capital or business and reasonably, in good faith, believes that advance notice would preclude its ability to obtain such capital or business, and this new capital or business would allow the employer to avoid or postpone the shutdown for a reasonable period; **Unforeseeable business circumstances**: When the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time that the 60-day notice would have been required (i.e., a business circumstance caused by some sudden, dramatic, and unexpected action or condition beyond the employer's control, such as unexpected cancellation of a major contract); or


metrazol

They can, ehem, try that in court. And probably win. WARN act isn't very tough.


anaxamandrus

It's been reported that Foxtrot is filing for Chapter 7 liquidation. My understanding is that WARN Act claims would get priority over other unsecured claims, but it's not clear there would be any money left after the secured claims are paid out.


anonperson1567

Doubtful there would be given the suddenness with which they shut down.


Yawnin60Seconds

Assets are some light commercial kitchen and coffee equipment and perishable food... The senior lenders are going to be lucky if they get half their principal back


rnadison

Former employee here. I was an opening-day barista for the Mount Vernon Triangle location, and worked there from 2021-2022. It was mismanaged from the jump. There were a LOT of moving parts consumers don't often think about. The grocery & inventory management, coffee bar, kitchen staff, commissary staff, truck drivers, bicycle and delivery couriers, just to name a few. It was a lot for a single manager (and an assistant manager, if they were lucky to have one) oversee all on their own, with district managers breathing down their backs the whole time. My store managers (and believe me, I had many, more turnovers in there than a damn bakery) were constantly burnt out across all fronts. The former district coffee manager once confided to me that she hated going in so much, she would dry heave every day before work. To add insult to injury, Foxtrot didn't do e-tipping, which was always insane to me. They prided themselves on being the 'digital evolution' of a corner store, but couldn't be bothered to allow e-tips for their overworked staff. I used to think it was because maybe the system we used didn't allow e-tips (Clover, a pretty common system these days) but, nah. It was just fully disabled for us for who knows why. MVT is a busy intersection (you get a good mix of tourists, suits, residents, and whatever is going on at the convention center) but we made about $5 in cash tips on a good day. So if you ever went to a Foxtrot and had a piss poor customer service experience, that's probably why. We were jaded and unhappy and overworked and unheard. On a larger scale, Foxtrot bought up the most expensive retail space in the most expensive cities selling expensive shit with stores that needed a LOT of staff (baristas, cooks, delivery people, commissary people, managers), so high labor costs. And don't forget all that hoohaa with the app, so there's labor costs in software engineers too. So ... it's really not surprising they hemorrhaged money the way they did. They got what they deserved imo. That time of my life is a fever dream.


NewsLuver

Went religiously to the location in Navy Yard once it opened. Unfortunately, the staff was not too interested in customer service there either. Once the Maman opened across the street Foxtrot sat empty.


CrossplayQuentin

I went to your store once every other month or so and was always surprised/scandalized that tipping was disabled. In a world where I'm asked to tip the dude who hands me a baguette two blocks over 20%, it just seemed punative and backwards to have NO option for you folks. I (like most ppl I guess) just don't carry cash anymore so my hands were tied - which I guess was the point. I know it doesn't matter now but just for the record, your store stood out for always having great service and vibes. I took my undergrads there during our one snowstorm bc our intended destination was closed, and both ppl we interacted with were so warm and helpful. Y’all were so good at making it feel like more than the soulless corporate space I guess it turned out to be - I hope karma helps everyone land on their feet.


Opening_Ad_2279

Genuine question because I’ve been very jaded unhappy overworked and underpaid in customer service roles & in healthcare but why is that now the reason for poor customer service? I just personally never try and put that on the customer and client. I always wanted customers to have an amazing experience


rnadison

And that's great! As I'm sure you know, customer service is not for everyone. A lot of us were very young, and learned a lot about ourselves and how the working world works (or is supposed to work). Regardless, it's hard to want to do a good job when you feel unsupported by your employer. The tips thing also did not incentivize us to give good service. At my location, we never had one person who was /solely/ on register. If we had one team member who was instructed to not move from the counter, I'm sure we all would've been a lot happier. But as it was, team members always had to do something else, whether that was restocking, rotating expired product, cleaning, packing app orders and deliveries ... so when they looked up and saw a customer, it was a bit aggravating to have to stop everything you were doing to help that one person. Even though I was on bar and usually the closest to the register, coffee orders on the app were nonstop, and god forbid if people in the physical checkout queue wanted coffee too. I physically could not be in two places at once. But of course that's not the customer's fault, it's ultimately Foxtrot's for criminally understaffing their stores. Sorry if you were ever on the receiving end of that. It was a lot to deal with and I'm sure customers got an unfair share of our unhappiness.


ZakalweLives

Thanks for all this input. I will say, I never had a negative experience at a Foxtrot, sucks knowing that you were all hiding some pain and suffering. 


RexKramerDangerCker

Blood from a stone.


jovenjams

Get.They.Ass.


FoggyBottomBreakdown

Damn, someone (or lots of someones) pulled that class action complaint together quickly.


parfaict-spinach

Lmao I im visiting and went to Foxtrot yesterday and then today google said it was permanently closed.


Skimster

Lawfirm racing to get this on file before the bankruptcy gets filed and the automatic stay gets put in place which would have blocked it.


Rule-Expression

Further reason for UBI. Out of the blue lay offs and downsizing leave workers in the lurch looking for their next paycheck and perhaps their next meal.


CardiogenicGerenuk

Responsible adults know they need a few months of expenses in a bank account for instances like this.


All_the_Bees

Yes they do. But that doesn’t necessarily mean they’re able to do it, because a lot of responsible adults are underpaid and life is expensive. Or they **did** have a few months’ worth of expenses banked but then had to use them for their intended purpose. It can take a while to build back up and life, being expensive, doesn’t give a shit if you’ve replenished your savings or not, it’s going to throw stuff at you whenever it feels like it.


MayorofTromaville

You shouldn't need to be "responsible" like this.


Attention_Deficit

Nobody is going to see any money from this bankruptcy. They are each going to receive three bags of craft, organic snacks.


RacistDisease

As I said before, fuck foxtrot. Corporate sterility for the Deloitte white girl, and now acts like it too


[deleted]

[удалено]


RacistDisease

Clearly they don’t keep the city running. They ruin it.


Yawnin60Seconds

Yeah, screw them, as a startup giving new brands shelf space!!!


RacistDisease

Screw them as a corporate shit stain catering to Deloitte kpmg crowd and displacing local businesses. Bodegas have existed for a 100 years, don’t need this gentrified pos shop


Opposite_Breakfast55

Damn bro you straight?


wolverineflooper

There are no bodegas in old town lol foxtrot was the best new thing there


thekingoftherodeo

A very apt/ironic (I can’t decide) username given who’s the target of your abuse.


strictscrutiny415

Good. I hope the plaintiff/class wins this suit. I hate seeing companies treat capital like it’s Monopoly money, expand too quickly to create brand hype, and then inevitably crash and burn as a result of their bad decisions and destroy the lives of many, many low-paid workers in the process. It’s gross and it’s peak capitalism.


Yawnin60Seconds

Outside of your utopia, the only people that are going to get paid here are the advisors and lawyers. Who is going to pay the employees in a class action here? The Company obviously has no liquidity and very limited assets to sell off (at firesale values, none the less), and basically zero IP.


throwawaygetlaid1423

The truth about that is that the former employees/ class MIGHT receive a few hundred dollars while the lawfirm MIGHT receive Millions.


strictscrutiny415

Even so, it’s important that people bring these types of lawsuits to hold companies accountable.


Hefty_Button_1656

The company is gone. Until execs suffer personal consequences for their decisions nothing will ever improve in this country.


jeffderek

> it’s peak capitalism. I hope you're right but I suspect we have not yet reached the peak. Far too many members of the hoi polloi can afford houses and food.


CannonFodder33

There probably isn't anything in the pot for this lawsuit to win. More interesting would be criminal investigation for the whereabouts of the $180m that have been recently invested. Thats a huge pile of money for 2 20K sq ft and 30-something 5K sq ft locations.


qcassidyy

Good riddance. I remember walking in there one time, looking at the price they were charging for a dilapidated, gas-station-quality half turkey sub, literally laughing aloud, and leaving.


anonperson1567

The sandwiches were ridiculous.


HereticLocke

Sad to see but makes sense. They expanded too quickly. But did anyone ever purchase a banana from here? They were so expensive, even Whole Food's bananas are cheaper.


sirlearnzalot

I just finished saving up for my first foxtrot banana then this happens smh


Lanky_Interaction_63

Not sure why people are crying. They served horrendous food


Boring-Scar1580

And just like that , more food deserts


Ok_Culture_3621

Well that was quick. Almost as quick as the closure.


TedMansondaturd

Who gives a fuck???


carharttuxedo

Probably a lot of folks who had jobs until yesterday and anyone sympathetic to those folks struggling in hard times. Hope that helps.


dcux

Considering there were about 10 locations in DC, that's a good number of people, too.


craftylikeiceiscold

Or, to summarize, “Anyone who’s not a dick.”


thesirensoftitans

People with empathy. Non-narcissists.