CHICAGO—The upscale convenience store chain Foxtrot, famous for its 60-minute delivery guarantee, recently raised $42 million in Series B funding from investors, Foxtrot announced.
The new investment round is led by Almanac Insights; chef David Chang, founder of Momofuku culinary brand; and Nicolas Jammet, co-founder of Sweetgreen Inc., a salad restaurant chain.
“This is the corner store reimagined,” David Barber, founder of Almanac Insights, told Bloomberg. “No one is going into bricks and mortar with this digital strategy.”
Foxtrot was launched in 2014 and now has eight stores in Chicago and two in Dallas. The company plans to open nine more this year, starting with Washington, D.C., on March 1.
Foxtrot differentiates itself with its hybrid, locavore model. In addition to major consumer brands, the stores offer products made by local artisans. Customers order via an app, and the average order is $50. Another specialty is private-label products, notably candy gummies, but the best-selling online items are wine and ice cream. “We sell a lot of bottles of small producer wine, with cans of White Claw. Customers know we have both of those things,” said Mike LaVitola, CEO.
In 2020, a 55% increase in store sales combined with a 200%-plus increase in e-commerce led to an overall revenue increase of more than 100% year over year, according to Foxtrot, which declined to disclose exact sales figures.
The pandemic has given the chain an opportunity to speed up expansion plans, LaVitola said. Because of their hybrid retail and delivery guarantee, store location is especially key to Foxtrot’s business plan.
“From a retail view, there were places that weren’t available that now are, and at much better economic terms,” he said. It’s estimated that 17% of restaurants in the U.S., around 110,000, have closed permanently or long term, leaving plenty of empty storefronts in or near high-density areas.
For upcoming locations, the company is prioritizing spaces with seating areas to increase opportunities for in-store dining, and LaVitola projects Foxtrot’s expansion rate to be 50% faster than it otherwise might have been.
“We’re seeing leases around 30% lower, and there’s most flexibility in making percentage rent,” he said, referring to leases that are based on percentage of sales rather than a fixed monthly fee.
LaVitola says his team identifies potential new locations by a combination of “deep analytics, looking at data sources and then walking the neighborhoods and vetting.” Foxtrot’s goal is to find a balance between being a coffee hub for morning drinkers and a happy hour hangout at night, while still being no more than 60 minutes away from the customers who are ordering from their sofas.
Read more about Foxtrot and its home delivery and congregation model in “Delivering Connections” in NACS Magazine.