Dive Brief:

• Foxtrot Market and Dom’s Kitchen & Market plan to merge, the companies announced in a press release Monday. Terms of the deal, which is expected to close by the end of 2023, were not disclosed.
• The two Chicago-based food retail brands plan to operate under a new entity, Outfox Hospitality, after the deal closes. Foxtrot CEO Liz Williams will become the new company’s CEO with Don Fitzgerald, Dom’s current CEO, serving as Dom’s president and chief operating officer through a transition period, per the announcement. 
• The companies said they share a vision for redefining food shopping and dining experiences, noting that their combination will further propel their ability to offer “thoughtfully curated products and experiences” to customers. 

Dive Insight:

Although the two retailers both have relatively small footprints — operating fewer than 40 stores between them — they have developed reputations in the industry for their innovative, upmarket store designs, carrying a curated assortment of goods and focusing on foodservice.

Both companies have also built neighborhood-focused businesses designed to attract local shoppers with prepared foods, beverages and a curated selection of groceries and other products, including locally sourced goods.

Foxtrot and Dom’s said they plan to unite their “fan-favorite” assortments as one company, bringing popular options like Foxtrot’s gummy candies and snacks and Dom’s prepared meal options across the stores.

Foxtrot, which opened its first store in 2016, currently runs 32 locations in four metropolitan areas, including Chicago; Austin, Texas; Dallas and the Washington, D.C. region. Dom’s opened its first location in 2021 in Chicago and currently has two stores in the city, with a third location set to open in Chicago’s River North neighborhood next summer.

For Dom’s, the deal with Foxtrot could potentially provide access to markets outside Chicago where Foxtrot has already established a presence.

Williams said Foxtrot plans to continue growing Foxtrot’s cafe and coffee options through the merger. 

Jay Owen, Dom’s co-founder and board chair, said in a statement that the Chicagoland grocer has “long admired” Foxtrot as an industry trailblazer. 

“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,” Owen said. “We do this by curating high quality goods, preparing expertly crafted meals, and delivering warm and friendly service.”

Williams, a former top executive at Taco Bell and hairstyling company Drybar, joined Foxtrot in June 2022 as its president and CFO. In April, Foxtrot appointed Williams as its CEO with co-founder and previous CEO Mike LaVitola moving into the chairman role.

LaVitola, Owen and Dom’s co-founder and co-chair Bob Mariano will hold advisor and board roles within Outfox.

In September, Fitzgerald fully stepped into the CEO role at Dom’s after serving as the grocery company’s co-CEO since 2021. A former executive of the Mariano’s supermarket chain, Fitzgerald noted in a 2021 interview with Grocery Dive that he saw Dom’s as a way to use his experience to launch a new venture.

“This was kind of my ‘Last Dance’ to apply everything I learned in my career, but still get a chance to try a startup,” he said at the time.

The deal between Foxtrot and Dom’s marks the latest regional grocery merger this year following announced deals between Aldi and Southeastern Grocers, Heritage Grocers Group and Texas-based supermarket chain El Rancho Supermercado, and Coborn’s and Illinois grocery chain Sullivan’s Foods.

Several regional grocers have combined in recent years in moves that industry observers say aim to bolster their competitive advantage against industry giants like Walmart, Amazon, Target and Kroger. 

Amanda Lai of retail consulting firm McMillanDoolittle said recently that mergers can help grocers scale faster than by creating a new banner or entering a new market, noting that they are a “great tactic” for expanding into adjacent or new markets.