Death of Fox & Obel

photo (63)I’ve written many “Death of” articles – death of Blackberry, death of the penny, death of the Encyclopedia Britannica. But this one really hurts…

Before Mariano’s Fresh Market, Whole Foods, Wild Oats, and Trader Joe’s (I’m still mad at them for not giving me an opportunity to interview after I submitted an application at a different point in my life out West, but that’s a story for another time), there was Fox & Obel, the Chicago-based, River East mainstay for over a decade. With rumored celebrity investors like Scottie Pippen, 5 dollar per ounce olive oil, truffle tasting stations, in-house wet and dry aged meats (initially the only grocer that carried Tall Grass Beef from Red Buffalo Ranch, owned by Bill Curtis), top-notch wine and apéritif lists, hard-to-find regional and international accoutrements, and a Zagat-rated cafe attached, people had flocked to what is arguably the first high-end grocery store in Chicagoland. And this was despite its sky-high prices (trust me, much worse than Whole Paycheck, I meant Whole Foods).

Manning the bakery was Phyllis, a lovely woman and native of South Africa who never hesitated to scold rude customers, who took it. There was Martha, the ever-smiling assistant manager greeting patrons as they walked in and out. And Juanita, café manager and a single mother (her son’s a star athlete at a local Catholic school). Juanita knew exactly how you liked your coffee. Fox & Obel managed the unlikely balance of Chicago Gold Coast uppity-up-ness with a neighborhood feel. My business partner (of Spend Matters fame) Jason Busch Ioved the bakery so much that its muffins, pastries and bread made it into our formal LLC operating agreement for our Spend Matters advisory business (i.e., written into the agreement was that one partner had to “stop at the Fox and Obel” bakery before business meetings – I kid you not, and yes we did honor the agreement!) Unfortunately, it’s now time to amend it.

For a while we’d heard rumors of additional investors, new stores in the downtown area, North American expansion. Then bam: the bottom fell out.

My wife Jenna and I walked around the closing sales event with heavy hearts. To Jenna and me, this was not just a grocery store – Tsige cooked for us, Sue babysat our kids, and on Friday afternoons I used to bring my RJSL and Spend Matters colleagues treats from the Fox & Obel bakery. So what happened? I can certainly make a few hypotheses.

  • Decreasing passion and sense of mission – After initial success, the original founders cashed out to private equity investors. And I could sense a gradual decline in quality over the past few years. Does that mean every buyout spells doom for those acquired? No, but it does mean that if cash flow buyers (as opposed to strategic acquirers) focus too much on the short-term bottom line, it will erode the X-factor that made the establishment special.
  • Hiccups in execution – It could be as minor as less crust on what used to be their signature almond croissant (Jenna noticed it after a new pastry chef came on board; the long-time head quit when his paycheck bounced), as major as multiple health code violations (fruit flies in food preparation stations is what I’ve heard), and everything in between, such as failure to pay electricity bills on time.
  • Poor inventory – Along with declining quality, I noticed that shelves were becoming emptier. No longer was Fox & Obel the go-to place for hard-to-find items, and even its staple trappings were sometimes missing, a cardinal sin for a grocery store. I am not a grocery industry expert by any stretch of the imagination, but even I could see tension between Fox & Obel and its suppliers.
  • Erosion of the foundation – No disrespect to technology and process (many economists claim these are the only two factors that could push the famed EFPC – efficient frontier production curve – outward), but people make up every business’s foundation, regardless of the segment. Again, towards the end, I heard grumblings from Fox & Obel’s employees. Perhaps they trusted me since I was a regular, but nonetheless, I never heard any complaints over the first few years.

I could go on and on, but it won’t bring Fox & Obel back. Furthermore, I think these causes of their failure are a good lesson for just about any business. And in case you were wondering what Jenna and I bought at the final closing sale, we stocked up on Fox & Obel water glasses and Mexican Coca Cola, made with real sugar. Coincidently, the sourcing of Mexican coke is a great personal procurement lesson – which involves having to pay significantly more for a far superior product (which also requires seeking out) albeit with the same corporate brand.

I promise to tackle more cheerful topics for the rest of 2014. Happy New Year, everyone.

We’ll also let you know what new Chicago bakery (La Fournette is highest on our current list) that Jason and I decided to amend and include in our operating agreement so that the entire Spend Matters and MetalMiner office continue to remain well-fed and sugared-up.

So You Want to Start a Business?

Aside from my stint in the military (6 years, 2 months and 15 days to be exact), I’ve had the good fortune of being involved with both early-stage companies (3) and starting one from scratch (5 so far).  For the most part, I was extremely fortunate to have good partners – only one failed due to poor planning and execution.  Every experience builds on itself and teaches you a lesson or two.  Failure taught me the biggest lessons in being an entrepreneur.  Below are my five rules to live by, developed as my must-haves through the years of school of hard knocks…

  1. Passion – let’s face it, everyone wants to be rich.  We don’t start companies to be poor.  But you have to have passion and vision for your products and services.  And it has to be beyond just making money.  PARR’s mission is simple – we provide world-class back office support to small and mid-sized companies so that owners can focus on what they do best, grow their business – and my partners and I are passionate about this.
  2. Trustworthy partner(s) – speaking of which, there’s only so much you can do as a sole proprietor.  Having that partner(s) whom you can trust is worth its weight in gold.  I ask myself three questions:  Do I like you?  Do I trust you?  Can you do your job?  If the answer is not yes to all three, the partnership is probably not going to work.
  3. Total commitment – no military training has ever prepared me for two things in life, marriage and becoming an entrepreneur.  If the Corps and the Army is hardest thing I’ve ever done physically, being an entrepreneur is the hardest thing I’ve ever done mentally.  Highs are so high; lows are so unbelievably low.  Without commitment, nothing else matters.
  4. Reserve capital – a good friend of mine (former founder of FreeMarkets and a lifelong entrepreneur) used to discuss run-way capital.  Don’t count on grants, line of credit or any other form of outside capital.  Unless you are bringing ready-made customers, you will need at least 12 months of run-way capital to make it.
  5. Focus on sales – nothing else matters…  One endeavor that failed, we had a decent idea, nice office space, business cards, desks, printers that can pump out pages of pristine documents, laminated business plan that we paid consultants to put together for soliciting outside capital (in violation of rule #3).  One problem – no prototype and no customers and in time, no money.  There were a few more hiccups, but that’s for another post.

Notice nothing technical such as business name, business plan, legal structure, zoning and licenses is listed above.  Not that they aren’t important, but I believe these tasks will get completed in due time once your business gets going.  Last but not least, go for it.  Once you have all your ducks in order, have faith and jump in head first.  No doubt you will be successful.

Follow

Get every new post delivered to your Inbox.

Join 53 other followers

%d bloggers like this: