Black-owned grocery investor receives $13.5 million city grant to acquire Save-A-Lot stores on the south and west sides

A Save-A-Lot in Auburn Gresham that closed in 2020 may reopen later in the year.

The city announced Monday that it would provide a $13.5 million grant to Yellow Banana, a grocery company owned by Cleveland-based investment firm 127 Wall Holdings LLC, to reopen the store and make investments in other Save locations. -A-Lot. The money is part of more than $49 million in grants announced by the city on Monday.

Yellow Banana plans to use the funds in combination with private money to reopen the Auburn Gresham store and acquire and renovate five other Save-A-Lots that it operates on the south and west sides of the city. Although Yellow Banana has operated those stores under the Save-A-Lot name since late 2021, the buildings are owned by Save-A-Lot. The total cost of the project is estimated at $26 million.

The city’s funding comes as grocery companies continue to close stores on Chicago’s south and west sides and as community leaders call on the city to provide solutions to the lack of access to food. In interviews, Yellow Banana executives said they are committed to increasing food access in Chicago’s underinvested neighborhoods, and that they are in town to stay.

“We want to be the grocery store of choice for communities and cities that are dealing with food insecurity,” Yellow Banana co-founder Michael Nance said in an interview with the Tribune. “We believe we can be creative thinking partners who can bring private and public dollars to bear on the situation. We believe we can provide solutions.”

Yellow Banana has operated six Save-A-Lot grocery stores on Chicago’s south and west sides since last year; nationwide, it operates 38 Save-A-Lots in a handful of cities, including Milwaukee and Cleveland.

Nance discussed plans for the Auburn Gresham Save-A-Lot at a neighborhood meeting in early July before the city announced its grant.

He didn’t mince words when he spoke of Save-A-Lot’s reputation in Chicago, saying the company had “stained” its name in the city. The physical condition of Save-A-Lot was not up to par, she said, and neither were the store’s products.

In 2020, Save-A-Lot announced plans to sell its corporate-owned retail stores and focus instead on wholesale; the company now owns and operates just 18 of more than 850 stores nationwide.

In a statement, Save-A-Lot CEO Leon Bergmann said Yellow Banana understands “the unique challenges these communities face and are committed and determined to work with each neighborhood to best serve them by providing food.” healthy at affordable prices. and providing them with a fresh and improved Save A Lot experience.”

Although 60% of produce in Yellow Banana-owned stores will be sourced from Save-A-Lot, Yellow Banana has begun experimenting with other sources of produce, Nance said. For example, the company has changed its produce supplier to offer fresher produce. “In your case,” he said, the company will be able to offer organic products. Yellow Banana is also interested in stocking some locally made products, he said at this month’s meeting.

Yellow Banana says owning the stores’ real estate will help keep the stores running; Groceries are a notoriously low-margin industry, which is especially true in the discount grocery sector, the executives said.

Ademola Adewale-Sadik, co-founder of Yellow Banana, said the company plans to install new LED lighting, HVAC and refrigeration systems, as well as install new fixtures and bathrooms.

“Here at Auburn Gresham we deserve a good grocery store,” Adewale-Sadik said. “West Lawn, South Shore, South Chicago, West Garfield Park, we deserve nice things too.”

Nance said the renovations will require stores to close for about three to four weeks each. Yellow Banana plans to stagger renovations and provide transportation to move people to other grocery stores when its Save-A-Lot is closed, she said.

Nance said Yellow Banana expects to open the Auburn Gresham store, located at 7908 S. Halsted, by the end of the year. The neighborhood lost another grocery store in June, when Aldi abruptly closed a store about a mile and a half from the closed Save-A-Lot. Other nearby grocery stores include a Walmart Neighborhood Market located north of the old Aldi in South Ashland and A Food 4 Less about a mile away.

The six Yellow Banana stores already operating in Chicago are located at 4439 W. 63rd St. in West Lawn, 420 S. Pulaski Road in West Garfield Park, 2858 E. 83rd St. in South Chicago, 10700 S. Halsted St. in Morgan Park, 7240 S. Stony Island Ave. in Grand Crossing and 644 E. 63rd St. in West Woodlawn. The West Woodlawn store is not included in the city’s grant funds.

Bergmann said Save-A-Lot’s shift to a wholesale model will benefit both its retail partners like Yellow Banana and the communities they serve by tailoring stores to local needs and saving money by using Save-A-Lot products. -Lot.

The south and west sides of the city have struggled for years with grocery store closures and a lack of access to affordable, high-quality food.

In April, Whole Foods announced it would close the Englewood location It opened to much fanfare in 2016 with the help of $10.7 million in city funding. A closing date for the store has not yet been announced. The city’s sale agreement with the site’s developer requires that a new grocery store be in operation within 18 months of Whole Foods leaving.

When Aldi closed its Auburn Gresham store in June, South Side councilors criticized the company and called for a citywide hearing on food access and grocery store closures.

Local elected officials in the neighborhood They said they learned about the closure from voters. Aldi cited declining sales and “repeat thefts” in closing that store, saying in a statement that it “didn’t take closing this location lightly.” In the past five years, there have been seven store block robberies, two of which took place at a grocery store, according to the city’s crime data portal.

Auburn Gresham Aldi wasn’t the first grocery store the company closed in a historically divestd neighborhood on the city’s south and west sides; closed a store in West Garfield Park last year.

Earlier this year, council members authorized the city to purchase West Garfield Park Aldi for $700,000. No replacement has been announced, but Department of Planning and Development Deputy Commissioner Peter Strazzabosco said the city expects to close on the property this summer. After the deal closes, a “community engagement process would follow to help refine neighborhood goals for a new supermarket operator,” Strazzabosco said. The city is in talks with potential grocers for the location, he said.

Strazzabosco said more than half of the 79 Chicago Recovery Plan grants announced Monday will go to new or upgraded grocery stores, restaurants and cafes. In total, the city is awarding more than $49 million during this round of grant funding, two-thirds of which is from the city’s Chicago Recovery Plan local bond issuance and one-third of which is from programs. TIF and the city’s Neighborhood Opportunity Fund. Strazzabosco said. The Chicago Recovery Plan includes funds from the American Rescue Plan Act passed by Congress and more than $600 million in local bond funds.

Yellow Banana’s award of $13.5 million is the largest of this round of grants.

Yellow Banana executives acknowledged grocery companies’ stories of store abandonment on the city’s South and West Sides and emphasized their commitment to Chicago communities as well as their own personal connections to food insecurity.

Nance said she grew up in a food desert on the east side of Cleveland. She now splits her time between Chicago and Cleveland.

“I think we respect these communities and people who have this background and quite frankly often look like us,” said Nance, who is black and Puerto Rican.

“We are in this business for the long term. There is no sunset, there is no end of life of the fund where we have to monetize the stores and sell them to the next owner, none of that,” Adewale-Sadik said. “We own these stores, we’re in town, and we’re there to stay.”

Strazzabosco said that while the operating terms of the city’s agreement with Yellow Banana have not yet been finalized, the terms of the grant would include “operations, occupancy and other covenants at each location” that would be in place for at least a decade. City Council approval of the terms will be required, Strazzabosco said.

“It’s a solution, it’s not the solution,” Ald said. David Moore in an interview last week. Moore has endorsed Yellow Banana’s plans to reopen the Auburn Gresham Save-A-Lot in its District 17. “Any time we can bring economic development to the community, it’s good and beneficial,” he said.

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