Richmond Street Fresh & Easy deal in trouble

A deal that would have brought a Fresh & Easy Neighborhood Market to downtown El Segundo has fallen apart, leaving a likely vacancy in the Richmond Street storefront that formerly housed Cooke’s Market.

Mark Neumann, the head of locally-based 612 Twin Holdings LLC, told the City Council on Tuesday night that Fresh & Easy had exited its lease agreement even after his company had, at the British-based conglomerate’s request, removed the freezers and other equipment that could have facilitated moving in another grocery tenant.

“Someone in the UK decided that El Segundo just wasn’t good enough for them,” Neumann said. “We are unhappy a grocery store is closing in the heart of the community, but we really tried to keep it going.”

A spokesperson for Fresh & Easy acknowledged that a final agreement for the site had thus far proved elusive but said the company still intends to open a store on Richmond Street.

“We are still committed to the site, but it is on renewed terms the landlord has not yet agreed to,” said Brendan Wonnacott, Fresh & Easy’s neighborhood affairs director. “As with all lease agreements, there is a due diligence process on both sides. That is where we are today.”

Cooke’s struggled to remain financially viable during recent recessionary times. Neumann said that after a year of not receiving rent payments for the 16,500-square-foot store, located at 300 Richmond Street, his company was forced to turn to another tenant. Fresh & Easy, a subsidiary of the British company Tesco, whose U.S. headquarters are in El Segundo, seemed like the perfect match.

“They pursued us and said they wanted to be here,” Neumann said. “We thought we had a deal.”

According to Neumann, the company agreed to a lease in April that was scheduled to begin on May 1. But Neumann said the deal fell apart after Fresh & Easy asked for two years of free rent.

“I just couldn’t afford it,” he said. “We are a small family company.”

Wonnacott said he could not divulge specifics of the company’s proposed lease terms other than to say the company is indeed looking for new terms.

“We consider this an ongoing negotiation,” he said.

Neumann said he still has faint hopes an agreement could be reached but stated unequivocally that the current proposed terms are not workable. He said his company has no plans to file a lawsuit.

“I hate lawyers,” he said. “They would end up with all the money. We just want to move forward.”

Fresh & Easy has 151 stores in California and 45 in Nevada and Arizona. Tesco opened the chain in late 2007, publicly announcing that it planned to invest $2 billion to open hundreds of stores in California and the Southwest. Tesco has of late come under pressure from shareholders to dump the mid-sized supermarket chain. Key shareholders want Tesco to focus on its British operations and sell off Fresh & Easy, which has been underperforming since it was launched.

Fresh & Easy has more than 200 employees in its corporate headquarters off Rosecrans Avenue. The company also operates a 15,000-square-foot store on Rosecrans.

Neumann said that the removal of all the equipment, including refrigeration units and shelving, would make finding a new grocery tenant a more troublesome task. He apologized to the City Council for “what Fresh & Easy has done to El Segundo.”

“We are now stuck with an empty building,” he said in a subsequent interview. “It creates a big hole in the middle of El Segundo.”

Wonnacott said the company still believes a deal will be reached.

“I want to reiterate that we are still committed to this site,” he said. “This is our home.”

Ed Pilolla contributed reporting to this story.

 

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