Yellow Banana gets six more months to complete city-funded grocery project

Yahoo

27-03-2025

Nearly three years after the city first announced it would hand out $13.5 million in public dollars to grocery operator Yellow Banana, the company says it will soon drag the delay-beset grocery store rehab project across the finish line.
But to get the project over the final hump, the company has requested and received a six-month extension to complete the project. The delay is due to getting external signs installed on all the grocery stores, the latest holdup in a project that has been beleaguered by construction delays.
In its initial agreement with the city finalized two years ago, Yellow Banana agreed to complete the project by the end of March this year.
With that deadline looming next week, five of the six South and West side grocery stores included in the city-funded deal are open. Yellow Banana requested city inspections of the final store, in West Lawn, on Wednesday, CEO Joe Canfield told the Tribune. That supermarket could be serving customers Monday, but it could take longer, he said.
'As soon as those inspections are done, we just need a couple of days to get produce and meat into the store, and then we're going to do a soft opening,' Canfield said.
In 2022, then-Chicago Mayor Lori Lightfoot announced the city would provide $13.5 million in city funds to the private grocery operator.
The money came as the city faced the closings of supermarkets in majority-Black neighborhoods on the South and West sides. That summer, Aldi closed a grocery store in Auburn Gresham. Months before, Whole Foods had announced it would soon shut down its Englewood location, which had been opened just six years prior with the help of millions in city dollars.
So, the city said it would give money to Yellow Banana, a grocery company owned by a Cleveland-based investment firm, to reopen an Auburn Gresham store that had been closed since 2020 and acquire and renovate five other Save-A-Lots the company already operated in Chicago.
Chicago's City Council approved the deal that fall, and the city and Yellow Banana finalized a redevelopment agreement in March 2023. The deal required Yellow Banana to complete the project by the end of March 2025 and to keep all the grocery stores open for a decade.
Under the agreement, the city has the right to terminate the deal with Yellow Banana if it does not complete the project by the deadline. That means the city could cancel any future payments of public funds to the company or take back dollars that have already been paid out if Yellow Banana doesn't hold up its end of the deal.
But in a March 10 letter to the city's Department of Planning and Development, Canfield requested extra time to complete the project because of delays installing exterior signs on four of the six grocery stores. The company that Yellow Banana initially hired to create the signs has shut down, Canfield said, forcing the grocery company to contract with another sign company.
'While the signage issue has been frustrating, it has not prevented us from accomplishing the core mission of our partnership — remodel and reopen clean, well-stocked, grocery stores that sell fresh, healthy, affordable foods to several underserved communities on the South & West sides of Chicago,' Canfield wrote.
Canfield said the request for an extension was due 'entirely' to the sign delays.
DPD Commissioner Ciere Boatright accepted Canfield's request for an extension in a letter dated March 25. The company now has until Sept. 27 to officially complete the project.
Yellow Banana has not yet received any city tax increment financing dollars. The company should soon receive a $1.45 million payment for the completion of the first store, in West Garfield Park, Department of Planning and Development spokesperson Peter Strazzabosco said.
The company is eligible to receive payments as it completes each store, but some of the funding will be withheld until the entire project is completed.
Last month, the Sun-Times reported that Yellow Banana owed payments to contractors totaling about $1.7 million. In an email, Save-A-Lot spokesperson Sarah Griffin said that 'any issues previously resulting delays in contractor payments have been resolved.'
Throughout the project, Yellow Banana has frequently pushed back timelines for reopening the grocery stores. When the city announced the deal, the Yellow Banana team said the Auburn Gresham supermarket could open as soon as the end of 2022. That store reopened just over two months ago.
Canfield said Thursday that the team 'probably underestimated the complexity' of the projects.
'We certainly would've communicated a different timeline knowing what we know now,' he said.
The company also found itself in dire financial straits over the course of the project, according to an August Chicago Sun-Times investigation that found it had racked up $2 million in debts, including unpaid tax and utility bills and business fines. A Northwestern University Kellogg School of Management professor called the company 'insolvent' after reporters asked him to review the company's 2022 balance sheet, the paper reported.
When asked in January whether he believed the company could keep all the stores open for a decade given its financial situation, Canfield said the company 'reacted to the situation that we found ourselves in.'
'When we got into the projects in Chicago, it became obvious to us that we needed to dedicate all of our resources to Chicago to be able to fulfill the commitments we made to the city,' Canfield added Thursday. 'And so we made some hard decisions, to close stores, to sell off some stores, and to focus all of our efforts in Chicago.'
When the Yellow Banana deal was first announced, the company operated close to 40 Save-A-Lot grocery stores in a handful of cities. Now, the company operates only seven grocery stores, Griffin said. All those stores are in Chicago, including one Englewood supermarket that was not part of the city-funded deal.
Canfield said he didn't think the at-times fierce criticism the company has received in Chicago has been unfair, but rather 'unbalanced.'
'We're investing in neighborhoods where almost no one else is investing,' he said.
Meanwhile, grocery stores continue to close in Chicago. In 2023, Walmart closed four Chicago stores, three of which were on the South or West sides. And last year, Aldi closed a supermarket in West Pullman.
The city has continued to struggle to address the issue.
In a bold announcement early in his term, Mayor Brandon Johnson said he would explore the idea of opening a city-owned grocery store to help tackle the problem. A study commissioned by the city found such a project to be 'necessary' and 'feasible' in Chicago.
But this year, the Tribune reported the Johnson administration hadn't applied for state funding that could have helped make a public grocery store happen. Later, the city said it had scrapped the public grocery store idea and was now considering opening a public market to help address food access issues, but has provided limited details on where the project would be located, when it would open and how it would be funded.