The Chicagoland grocery industry got a little more interesting Monday with the announcement that modern convenience chain Foxtrot and natural grocery chain Dom’s Kitchen & Market will be merging in an all-stock deal that will create a new holding company called Outfox Hospitality.
Terms of the deal, which is expected to close by the end of the year, were not disclosed but Outfox’s CEO Liz Williams (and current Foxtrot CEO) said it is a “fifty-fifty split” between the two companies.
Outfox Hospitality’s day-to-day operations will be led by Williams with Foxtrot co-founder Mike LaVitola and Dom’s co-founders and co-chairmen Jay Owen and Bob Mariano serving as advisors and in board roles within the new organization.
During the transition period, Dom’s third co-founder and CEO Don Fitzgerald will serve as president and COO of Outfox Hospitality while the “leadership structure is put in place,” Williams told NOSH today. No further details of Fitzgerald’s role after the transition period were shared.
The companies would not comment on how long the deal has been in the works but Williams said the connection between the two brands dates back many years when Foxtrot’s founders — Taylor Bloom and LaVitola — connected with Mariano for advice during the early years of the convenience chain’s growth.
The two brands will retain their respective names but will eventually merge online ordering apps and rewards programs. Foxtrot will grow its prepared food business, expand into private label offerings and prioritize its cafe and coffee business, Williams said, while Dom’s will add Foxtrot’s branded gummy candies, snacks and wines to the grocery store shelves.
The merger will provide the buying teams with more scale, giving smaller producers a more streamlined process for getting new products on both retailers’ shelves, Williams said.
Williams declined to comment on potential layoffs at either company as the new entity takes a look at operations level staffing redundancies.
“As you bring together organizations, you figure out where you’ve got some overlap and then where you have any holes or need to continue to build out the team,” she said. “Certainly in this instance that is the case. We’re working through right now where there is overlap to define that and then we’ll work with those few folks that are impacted.”
Although Foxtrot landed a $100 million investment in January 2022 to expand into the Washington D.C. metro area and Texas, the company’s headquarters and largest store count is still in Chicago. Foxtrot operates 32 stores and is targeting high-traffic urban areas like Boston to further expand.
Though the merger does not change the “types of markets Foxtrot is focused on” expanding into, Williams said, it will create an opportunity “to regroup as a leadership team and as a board and really think through what’s the pace of development.”
Founded in 2021, Dom’s Kitchen and Market is the brainchild of Chicago grocery veteran Bob Mariano, who led Midwest supermarket chain Mariano’s for nearly 14 years. Currently, the retailer operates two supermarkets in Chicago’s Lincoln Park and Old Town neighborhoods with plans to expand to a third location in River North by next summer.
Dom’s has taken an alternate approach to traditional supermarket chains by focusing on stores with smaller footprints and a more robust prepared food section bringing a more experiential shopping experience to consumers.
“Dom’s has long admired the Foxtrot brand, viewing it as an industry trailblazer and a market disruptor,” Owen said in a press release statement. “Our shared vision centers on bringing the convenience of a market together with the experience of a restaurant into hospitable spaces that are destinations in the communities we serve.”
Guggenheim Securities served as the financial adviser to Foxtrot and Latham & Watkins as its legal adviser. Greenberg Traurig was legal adviser to Dom’s Kitchen.