Posted by Jay Livingston
“That’s private equity for you,” said Steve Jenkins. He was standing outside the uptown Fairway at 125th St. about to go to breakfast at a diner across the street. He no longer works at Fairway.
He helped Fairway expand from one store to two, then four. He still selected the cheeses. He wrote the irreverent text for their signs, including the huge electric marquee that drivers on the West Side Highway read. And then in 2007 Fairway got bought out by a private equity firm. The three original founders cashed out handsomely. Steve and others, including one of the original three partners, stayed on. Much of their their share of the deal was in Fairway stock, but with restrictions that prevented them from selling.
Fairway kept expanding – stores in more places around New York – and they aimed more at the median shopper. Gradually, the store lost its edge, its quirkiness. With great size comes great McDonaldization – predictability, calculability. “Like no other market,” says every Fairway sign and every Fairway plastic bag. But it became like lots of other markets, with “specials” and coupons. Coupons! Fairway never had coupons. Or specials.
The people who decided to introduce coupons and specials were probably MBAs who knew about business and management and maybe even research on the retail food business. They knew about costs and profits. Knowing about food was for the people below them, people whose decisions the could override.
“I gotta get permission from corporate if I want to use my cell phone,” said Peter Romano, the wonderful produce manager at 74th St. – another guy who’d been there almost from the start. He knew produce like Steve knew cheese. Peter too left Fairway a few months ago.
Maybe this is what happens when a relatively small business gets taken over by ambitious suits. Things are rationalized, bureaucratized. And bureaucracy carries an implicit message of basic mistrust. “If we trusted you, we wouldn’t make you get approval. We wouldn’t make you fill out these papers about what you’re doing; we’d just let you do it. These procedures are our way of telling you that we don’t trust you to do what you say you’re doing.”
The need for predictability, efficiency, and calculability leave little room for improvisation. The food business becomes less about food, more about business. It stops being fun. The trade-off should be that you get more money. But there too, Fairway’s new management disappointed. They expanded rapidly, putting new stores in questionable locations. In the first months after the private equity firm took Fairway public in 2013, the stock price was as high as $26 a share. Yesterday, it closed at $1.04. The shares that Steve Jenkins and others received as their part of the private equity buyout are practically worthless.