‘Still locally operated’ 'Guided capitalism' swallows up West Coast 'conscious capitalist' grocers

New Seasons’ Central Kitchen in Portland, Oregon |



Story and photos by Mara Reynolds

Since its earliest days, New Seasons market in Portland has built its brand on a message to its employees and even customers that they might one day become direct owners of the (once) locally owned and locally focused company. While they’ve branded themselves as “conscious capitalists,”  the company has been quietly sold off to a staggering layer-cake of investors, subsidiaries and parent companies, ultimately benefiting billionaires living far outside any shopper’s understanding of the term “local.”

As Voices reported last month, Santa Cruz’s New Leaf Markets — along with Metropolitan Markets in Seattle, New Seasons in Portland, as well as Bristol Farms and Lazy Acres in Southern California — are now collectively owned by Good Food Holdings. Good Food Holdings was purchased last year by PK Retail Holdings, which is a subsidiary of E-mart, which is run by the Shinsegae Group, a conglomerate of “hypermarkets” run by a South Korean chaebol. In South Korea, a chaebol is a family-controlled business conglomerate (see sidebar).

These new owners have made it clear they don’t intend to change much as far as customers are concerned. As one worker described an internal memo about the sale, managers reassured staff they can tell concerned shoppers the store is “still locally operated.” They want each store to maintain its unique local culture, leadership and niche market. They don’t plan to change what’s on the shelves — much. Each region will focus exclusively on its own regional market (the Seattle-area New Seasons will become a Metropolitan Market, and other non-local expansion efforts will be scrapped).

As if to drive home the point, in late December, Santa Cruz’s New Leaf emailed advertisements titled “New Leaf’s Commitment to Local” that described its local charitable efforts and even a loan program for local food producers.

The message to customers is clear: don’t worry, only the owners are changing.

Up a long and complex chain, profits from New Leaf and New Seasons will soon flow to one of the richest families on the planet.

Friends like these 

New Leaf became a part of this story when it was purchased by New Seasons Market in November 2013. Hopes were high for the partnership. Both stores had deeply loyal customer bases and solid reputations as reliably progressive grocers and employers. As one of the few shoppers I know who has shopped at both stores since their early days, I for one was skeptical about what this would ultimately mean for New Leaf.

Like the other markets now in the Good Food Holdings family, the rapid-fire expansion of New Seasons’ brand across its region has been deeply entwined with its locally focused vision and values, just like New Leaf. While there have always been critics, there’s also been a consistent, general sense of trust, collective ownership and even responsibility among customers to see New Seasons markets succeed.

Part of New Seasons’ enduringly mixed reputation has been for its self-defined values-driven employment practices; from their earliest days, New Seasons has prided — and branded — itself on prioritizing its staff’s wellness, even as it has pushed back against workers’ efforts to organize.

Current job listings with the company describe “a progressive workplace, where we listen and trust more than dictate,” and its website touts their “Speak Up” culture and value-driven policies.

While many complaints about New Seasons trace back to initial investments by private equity firm Endeavour Capital in 2009 (more on that later), concerns about employees’ rights at the company had already been simmering among staffers.

“We always knew what end-game we didn’t want” 

One of the most shockingly consistent messages that New Seasons has projected since its earliest days is that this store was created by and for the community — and that one day, owners genuinely hoped that staff and the community would take full ownership of “the friendliest store in town.”

This message served as a Trojan Horse for the investment company that would ultimately sell New Seasons and New Leaf to overseas owners.

Announcing his retirement and replacement in December 2009, New Seasons co-founder and then-CEO Brian Rohter explained to The Oregonian: “From the beginning, when the three (founders) sat down to talk about what we wanted to do, we had to think about what the end-game would be — and we always knew what end-game we didn’t want.”

“We didn’t want to be swallowed up by another large company. We didn’t want to become a division of someone else,” Rohter said.

As he exited, Rohter assured customers and employees that the company wanted them to take ownership, and they were actively working toward it. He elaborated on the company blog:

“One of the primary goals of the founders of New Seasons Market has been to figure out a way to have the ownership of the company more broadly-based. This could happen through an employee stock ownership program or some type of community stock offering or a combination. We’ve been working to achieve those goals for the last five years, but it has been a complicated and challenging process and over the last year or so we realized we could use some help.”

“We want our employees to own a piece of the business” 

Help arrived in the form of Endeavour Capital, “a leader in helping food and retail companies move to broad-based employee ownership,” as Rohter explained in his retirement announcement on New Seasons’ blog.

On their website, the private equity firm explains that “Endeavour was inspired by Captain Cook and his ship (H.M.S. Endeavour). His approach reflects our philosophy of stewardship, leading to healthier companies and communities.” Captain Cook represented the British Empire and was among the first Europeans to set foot in Polynesia, New Zealand and Hawaii. Endeavour goes on to describe the colonist and his vessel: “His style was patient and methodical where his predecessors had been more hurried and reckless. … The ship was not swift, elegant or luxurious, but it proved to be superbly seaworthy in the reef-strewn waters of the Pacific.”

In a recent interview with Voices, a long-time New Seasons staffer recalled being “present in a meeting where representatives from Endeavour and members of our board talked directly to workers and specifically said that Endeavour was brought on specifically because of the desire to move to an employee-owned model, and Endeavour supposedly had some experience with moving toward that model … And it had been talked about by one of the previous owners, Brian Rohter, at several store meetings previous to the buyout by Endeavour. That was an ultimate goal of the owners.”

Selecting Portland-based Endeavour Capital to lead the transition toward employee ownership was branded as yet another locally-oriented choice by New Seasons.

Rohter’s replacement, longtime employee Lisa Sedlar, told the Oregonian: “‘We want our employees to own a piece of the business. …Ever since we opened store No. 2, employees have worried we’re going corporate. This is the antithesis of going corporate. We’re rewarding employees for a job well done.'”

What Rohter and Sedlar failed to mention at the time was that Rohter was selling his shares to Endeavour Capital for about $11.2 million, giving the firm a majority stake in New Seasons from that point on.

In fact, it would take years for that shift to become public knowledge.

Ten years later, Endeavour Capital sold New Seasons — and New Leaf along with it — to E-mart.

“The goal is that Endeavour will step away” 

For a while, Endeavour appeared to be doing what they were brought on to do. New Seasons wasn’t exactly “employee owned,” but a new employee-rewards project seemed promising. When New Seasons co-founder Chuck Eggert announced his retirement in February 2012, that program was up and running according to plan.

The company continued to send the message that the owners’ goal was for New Seasons to eventually be owned by the staff and members of the community they served. The Oregonian reported that1,400 employees were granted options they could cash out when they left, shares that represented about 10 percent of the company.

But it seems those options were as far as the program went. With Endeavour holding the reigns, the goal of employee and community ownership was quietly de-prioritized. The longtime staffer recalled: “the conversation was at least carried on for … maybe a year or two after Endeavour came on,” but wasn’t brought up by management again.

Upon his retirement, Eggert, too, sold his stock to Endeavour Capital, just as Brian Rohter had done before. As the Oregonian (erroneously) stated in 2012:  “With the sale of Eggert’s stock, ownership of the 12-store chain swings — if only temporarily — to Endeavour Capital, the firm that was brought on to help New Seasons create an employee option plan that would give employees equity stakes.”

But the swing had already headed in another direction — two years prior — and it was never going back.

Keeping up appearances

New Seasons leadership continued to obscure the role of Endeavour Capital in its shifting agendas. In November 2013, New Seasons announced it was buying New Leaf, seemingly out of the blue.

Amid an otherwise straightforward article on the new partnership in Portland Business Journal at the time, this quote from New Seasons’ then-CEO Wendy Collie now stands out:

“A business broker working with (New Leaf Market founder Scott) Roseman on a transition strategy brought the company to the attention of Endeavour Capital, New Seasons’ capital partner. 

‘New Seasons completed the deal on its own,’ said Collie.” 

Collie had to have known that wasn’t quite accurate. Endeavour had been majority owner of New Seasons since at least 2010, so the deal couldn’t have conceivably been completed without them. But she was laying the groundwork for what was to come: before the end of November, 2013 — weeks after buying New Leaf — Endeavour Capital invested over $17 million more in the newly merged chains.

Before this happened, New Seasons maintained that the merger was about two similar neighborhood-focused grocery stores that wanted to leverage resources to better serve their communities. This wasn’t a corporate takeover, and there weren’t any outsider investors involved that shoppers needed to worry about. Sure, they were expanding — partnering — but these two beloved local grocers were doing it on their own terms.

Meanwhile, Endeavour had also been expanding its holdings of West Coast natural grocers. After it acquired majority ownership of New Seasons, and before the New Leaf buyout, Endeavour used a separate fund to pick up the Southern California grocers Bristol Farms in 2010 (which had already picked up Lazy Acres in 2005), and in 2012 rolled these up with Seattle’s Metropolitan Market into a new company: Good Food Holdings.

The right partner

In September 2019, New Seasons employees reached out to Portland labor organizer Jobs With Justice, keenly aware that Endeavour Capital’s 10-year investment window would soon be drawing to a close. The staffer mentioned earlier recalled: “There was secrecy and there (were) conversations that were being had between workers and higher-ups that confirmed that the company was looking for a buyer.”

The long-time staffer familiar with the company’s shifting policies notes that one change resulted in many workers losing benefits either permanently or, more challenging, on a quarterly basis: “If (your average) came under by even a fraction of an hour, they would take you off of benefits for a quarter.”

And this wasn’t always under workers’ control. “I definitely saw coworkers have that experience where they got sick and they didn’t have enough hours to cover it, and, you know, had to try to make it up, and lost their insurance for a quarter. Yeah, that was not uncommon,” the staffer said. Numerous employees also report going to work while sick to avoid putting their health benefits at risk or being fired for accumulating 10 “attendance points.”

Jobs with Justice launched a survey asking employees and customers what future they envisioned for New Seasons. According to executive director Will Layng, “95 percent of respondents (workers and customers) supported employee ownership out of the options presented, and 100 percent of worker respondents supported employee ownership.”

A current New Seasons employee told Voices: “Although we all knew that something was coming up, it kind of felt like we were shut out of the conversation, until they announced the deal. …Nobody that I work with was caught off guard that there was a deal. We were caught off guard as to the details of the deal, and it felt like we weren’t given a chance to really discuss employee ownership.”

In December 2018, Endeavour Capital sold Good Food Holdings to E-Mart for $275 million. One year later in December 2019, New Seasons and New Leaf announced they’d been purchased by Good Food Holdings from Endeavour Capital for an undisclosed amount (at least one source suggests the figure was around $200 million).

The deal is expected to close in early 2020.

Although E-mart announced it had purchased California-based Good Food Holdings on Dec. 7, 2018, it did not pay any foreign income taxes (i.e. U.S. local, state or federal) for 2018. Because of the delayed nature of tax filings, it remains unclear whether and to what extent the company will pay any U.S. taxes for fiscal year 2019.

Managing Director of Endeavour Capital Stephen Babson was recently quoted in the Half Moon Bay Review, explaining the sale of New Seasons and New Leaf: “It was important to us that a new partner in the business understand the company’s ongoing commitment to its mission, values and broad engagement with employees, customers, vendors and communities. …Good Food Holdings is the right partner to support and continue this legacy.”

Babson and Endeavour have not responded to requests from Voices for comment.


New Seasons' Central Kitchen in Southeast Portland, Oregon

New cash cows

Although consumer reactions to news of the sale have been mixed, skepticism appears to have grown since the abrupt closure of New Seasons’ Central Kitchen in Portland just three weeks after the sale was announced.

On Dec. 29, Central Kitchen workers arriving for their shifts found a note on the door announcing the facility had been closed indefinitely “to better assess workflow and make changes within the facility.”

The Central Kitchen produces hot and cold prepared foods for the market’s deli, including everything from raw pizza dough to salad dressings; the closure has left both staff and customers scrambling for answers as well as products.

Although listings on the company’s HR page have since been deleted, at least seven positions at the Central Kitchen were being actively recruited for as recently as Jan. 7, the date through which staff were initially assured they’d be paid for already-scheduled shifts.

On Jan. 8, Willamette Week reported the facility would remain closed until further notice, quoting CEO Forrest Hoffmaster. “This in no way (was) related to the merger or our new buyers,” he said. Instead, he explained, the closure was because New Seasons had hired “outside consultants to assess the facility’s workflow, machinery and production” who ultimately decided “the only way we could really do this work is to suspend operations for a period of time.”

“In fact,” Hoffmaster goes on, the new owners “are coming here next week to talk through what can we build and create out of this facility and transfer up to Seattle.”

Julie Teune, New Seasons’ Senior PR and external communications manager, declined to define “assessing workflow” or explain what the new owners hope to “build and create out of this facility” either in Portland or Seattle. She told Voices that staffers’ pay and benefits were not being affected, and noted that the closure of the Central Kitchen in Portland would have no impact on New Leaf Markets in California. “We are providing staff with weekly updates about the next steps with facility operations, and staff have not had any interruption in pay and benefits.”

“It’s kind of hard to be supportive and keep up the good morale,” said one current store clerk. “You know you have the people that drank the Kool Aid and will always, you know — New Seasons until they day they die — be solid supporters of it, and I get that. But a lot of others are just kind of wondering, like, it’s hard to not be cynical when we’re not getting any answers. About anything.”

“Herding cats on to a roller coaster”: E-mart in trouble

For its part, E-Mart appears to have bought up the newly expanded chain of West-Coast natural markets in an effort to drum up cash to support its struggling businesses in Korea. A Dec. 22 article in the Korea Times titled “Retail business groups go into emergency mode” explains that profits for E-mart are down more than 40 percent since one year prior. Facing “sluggish consumption, high rental costs and other unfavorable conditions,” E-mart officials say they’ve “been drawing up survival plans in order to maximize profits and efficiency.”

According to the article, “The money that will be saved from the cost-cutting efforts will be used to find new cash cows.” Those cash cows are largely acquired through increased debt. A recent analysis by Simply Wall Street describes E-mart’s expanding 2019 deficit “like a colossus towering over mere mortals,” noting that if current earnings trends continue, “paying off its debt will be about as easy as herding cats on to a roller coaster.” They conclude: “E-MART really is carrying too much debt. To our minds, that means the stock is rather high risk, and probably one to avoid.”

As the deal nears its official closing and the sense of impending change grows among staff and shoppers, news of Good Food Holdings’ (and thus E-Mart’s) buyout of New Leaf and New Seasons has prompted mixed reactions. Some shoppers are realizing for the first time that the stores had been majority-owned by a private equity firm for most of the last decade, prompting them to add the stores to their list of boycotts, next to Amazon-owned Whole Foods. Others are concerned a boycott will harm local employees and regional organic produce networks supported by the stores.

The record shows that shoppers in the Santa Cruz, Half Moon Bay, and Portland areas are more than willing to pay a premium for buying groceries at shops that reflect and support their local community and values. Commenter Zack B. notes in response to a recent Half Moon Bay Review article on the buyout:

“New Leaf used to be a good market and paying a small premium over other grocery stores was expected. I do not think that is the case now. Getting gouged under the premise of caring for the community is not my idea of integrity and value.”

With Good Food Holdings at the reins, consumers’ willingness to continue paying that premium will be put to the test in the coming months. As profits from west coast producers and shoppers begin to flow to a Chaebol overseas, customers will decide whether New Leaf and New Seasons can hold onto the integrity and support that got them here.

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Mara Reynolds

About Mara Reynolds

Mara Reynolds is a fourth-generation Santa Cruzan and a third-generation journalist currently living in Portland, Oregon, where she also works as an editor, artist, educator and herbalist.