In November 2023, when it agreed to merge with a larger, fast-growing grocery chain, Dom's Kitchen & Market was a venture capital-backed upscale grocer that represented the latest food venture from Bob Mariano, the former chairman and CEO of Milwaukee-based Roundy's Supermarkets Inc.
Indeed, at the time Dom’s Kitchen had raised $25 million in total capital, which the company had said would be used to open more stores in the future. Dom's had two stores in the Chicago area and had a third Chicagoland location in the works on its way to a planned 15 locations.
Now those investors could be left with little. The sudden shutdown this week of Dom's Kitchen & Market and its fellow grocery chain, Foxtrot Market, by their parent company Outfox Hospitality has left food creators and investors alike with more questions than answers.
Disha Gulati, CEO and founder of Here Here Market, an online marketplace for gourmet food products, said she was in utter disbelief when she first heard the news.
"We work in the startup world, and businesses go out of business on a fairly frequent basis. That is less surprising. What is more surprising is the way it went down. No one was given any notice," Gulati told Chicago Inno. "We share a lot of local creators, and I was just on the phone with them trying to see what their exposure was. I don't think they've had a form of communication from Foxtrot."
Laid-off Foxtrot workers along with workers' rights organization Arise Chicago held a rally Friday at 2136 S. Peoria St., the Foxtrot Commissary where they worked, demanding 60-days pay. The workers and Arise Chicago also filed charges with the Illinois Department of Labor on Tuesday challenging that they did not receive proper notice.
According to local news reports, signs were posted at Dom's Kitchen & Market locations on Tuesday informing people of the closure.
The company said that as of Tuesday, all delivery capabilities, store operations, store credits and customer-facing operations would be no longer available.
"We explored many avenues to continue the business but found no viable option," the company said in a message posted on its website Tuesday.
Foxtrot Market and Dom's Kitchen & Market merged at the end of 2023 to become the combined entity Outfox Hospitality. The shutdown affected all 33 Foxtrot locations and two Dom's grocery stores across Chicago, Dallas, Washington, D.C., and Austin, Texas.
Both Dom's sites and around half of the Foxtrot sites were in the Chicago area.
Foxtrot, Dom's exit leaves a 'gap'
For local entrepreneurs and food creators who were selling their products in Foxtrot and Dom's stores, the closing leaves them with one less partner in the community. Gulati said the closing is likely to have "national ripples."
The shutdown served as a cautionary tale for participants at a pitch event for emerging CPG and food brands held Thursday by locally based agency C.A. Fortune.
"What we always say to our brands is that in today's marketplace, where there's acquisitions and bankruptcies happening all over the place, it's why you need to be incredibly nimble and critical about who you partner with as you grow your brand," said Meagen Arensdorff, vice president of the C.A. Build segment of the agency. "What we're really recommending to our brands is to proceed with caution and to really think through the retailers that you want to partner with out of the gate."
Gulati said that in terms of the overall emerging CPG landscape in Chicago, the departure of Foxtrot and Dom's leaves a big hole.
"They were the launching pad for so many brands, and I think it might make people more skeptical about similar concepts," she said.
Gulati says her business, an online marketplace, has a much different model than Foxtrot, yet she is already starting to see some level of skepticism now working in a similar space.
"We need to think about how we are going to fill the gap. Getting into traditional retail is hard, and Foxtrot was essential for a lot of folks to build their first 1,000 orders," she said.
To help some of the food startups that may have been impacted, Here Here Market is offering discounts to both their existing partners and others new to the platform that might need a new outlet to showcase their products to a wide, national audience.
"Here Here Market is discounting their products, so we are eating those costs," Gulati said, "but it's just a way for us to support our existing community and try to accelerate sales to try to fill some of those gaps."
