In 2021, Time Out magazine named Andersonville, in Chicago, Illinois, the coolest neighborhood in the United States. For Mia Sakai, who had just opened a bodega in Andersonville called Ándale Market with her husband, that was the beginning. Andersonville was now a target for a force that has been smoothing over neighborhoods around the world: venture capital (VC).
The uniqueness that made Andersonville tempting to VC investors was something Sakai worried they would destroy.
“A neighborhood that is, let’s say, dense with Lululemons and Baby Gaps and Anthropologies. . . . You’re not going to call that neighborhood the coolest neighborhood in the world, because it’s essentially replicated in different areas of the country,” Sakai says. It didn’t take long after the Time Out piece for the chains to move into Andersonville. Warby Parker, Jeni’s Ice Cream, and Taco Bell all opened locations in 2022 and 2023.
As these chains filled Andersonville storefronts, executives from coffee and convenience chain Foxtrot began haunting Sakai’s Ándale Market, “always kitted out in Foxtrot gear,” she says. “They would pay with a corporate Foxtrot card. My husband and I looked up one of their names on LinkedIn, and it was like, ‘lead merchandiser.’ ”
They’d ask Sakai, “What is it that you’re most proud of selling here?” More than once, Sakai says, she’d soon see that product on Foxtrot’s shelves at locations around Chicago.
Foxtrot launched as a delivery app in Chicago in 2013, as part of the University of Chicago Booth School of Business New Venture Challenge. The co-founders had the resources of the Booth School and $50,000 from family and friends. Their original vision revolved around the idea that traditional convenience stores are neither convenient enough nor high-end enough. In 2015, after realizing that it is illegal to sell alcohol in Chicago without a brick-and-mortar location, Foxtrot opened its first store in the West Loop. As Foxtrot shifted its focus to physical stores, it shifted its stated business brand as well. Foxtrot, its owners said, would be about cultivating community, supporting local businesses, and creating an environment that was upscale compared to traditional convenience stores.
When Foxtrot staff first started coming into Ándale Market to ask about its offerings, Sakai says she was more or less happy to talk to the newcomers. But over time, the visits began to feel invasive.
“Where it starts to cross the line is where it becomes extremely repetitive. When, you know, you turn around and, like, they’re selling the same thing. That happened upwards of twenty-five to thirty times, I would say. At that point, it starts to feel personal.”
When, in 2023, Sakai learned that Foxtrot planned to open a location in Andersonville across the street from her, she decided she had to do something to help the neighborhood hold onto its character. By this point, Sakai had read up on Foxtrot and realized she was up against its more than $160 million in VC investment.
Andersonville is not a gentrifying neighborhood in the typical sense. Neither are any of the neighborhoods in Chicago, Dallas, and Washington, D.C., where Foxtrot grew to thirty-three locations. Foxtrot targeted neighborhoods that had long been considered affluent or that were already thoroughly gentrified, like Chicago’s Wicker Park.
“The way that sociologists tend to talk about gentrification is in phases,” says Alison Alkon, a sociology professor at the University of California, Santa Cruz who co-edited the 2020 book A Recipe for Gentrification: Food, Power, and Resistance in the City. By the time the book came out, Alkon says, it had already started to feel out of date because it didn’t deal with the latest venture-capital-fueled stage of gentrification.
This newest phase, which has unfolded to various degrees in neighborhoods like Andersonville and Wicker Park in Chicago, Williamsburg in Brooklyn, or Silver Lake in Los Angeles, is the result of venture-capital-funded corporations trying to cash in on the cool factor of gentrified neighborhoods that draw traffic with quirky coffee shops or community gardens. But unlike Starbucks or Target, these newer VC-funded chains often try to disguise themselves as, or at least co-opt the ethos of, local institutions.
“The force of this countermovement that was trying to make things kind of quirky and independent actually got absorbed into VC,” says Alkon, “like waves washing over cities across the world in a way that made them look more and more alike.”
The venture capital phase of gentrification can be disastrous for established local businesses, who suddenly have competitors with tens of millions of dollars in backing providing similar services, driving up rents in the neighborhood while, in some cases, simultaneously driving down prices for consumers.
“One of the challenges that you’ve got with small businesses competing against big businesses is that the big businesses are able to leverage their negotiating power, both with suppliers and with employees, to lower prices, and smaller businesses struggle to compete with that,” says Brendan Ballou, author of Private Equity’s Plan to Pillage America and former special counsel for private equity at the U.S. Department of Justice. That drive to compete can also lead to worse products, worse customer experiences, and worse conditions for employees.
Foxtrot certainly branded itself as a local store, even when it became clear that its main goal was expansion. In 2021, Foxtrot announced it planned to open fifty new stores in the span of two years.
“If you’re taking outside investment, it’s not local anymore. It’s not Chicago anymore,” Sakai says. “Your loyalty isn’t necessarily just to your customers or to your staff. It’s to these investors who are hoping for insane amounts of growth from your business.”
Sakai started a campaign in late 2023 with other small business owners in Andersonville to stop Foxtrot from opening in the neighborhood. It worked. But even if it hadn’t, Foxtrot might never have made it there.
Months later, in April 2024, Foxtrot shocked the business community in Chicago and beyond. The company shut down—not overnight, but after employees all over the city, and in Austin, Dallas, and Washington, D.C., had come in for their morning shifts. It was mid-morning when store teams at the thirty-three Foxtrots around the country got the news. Staff were told to kick customers out and close shop.
The shutdown provides a clear illustration of how little loyalty Foxtrot actually had to the staff they employed and the communities they served. Its layoffs violated the WARN Act, a federal law which requires large companies to give employees sixty days notice before mass layoffs. Local vendors are still waiting on hundreds of thousands of dollars for unpaid invoices—money they’ll probably never see, since Foxtrot is likely to have its debts discharged in bankruptcy proceedings even as three of its locations reopened this past September under a new parent company, Further Point Enterprises.
In its most naked form, VC funding invites backlash. Bodega, a short-lived convenience business that operated in New York from 2017 to 2020, never bothered to hide its invasive intentions. Like the original Foxtrot, Bodega’s mission was to make convenience stores even more convenient—or, in reality, reduce human interaction in exchange for a large markup. Inside apartment buildings, Bodega set up kiosks that used artificial intelligence so that customers could simply walk away with products and have their credit cards charged without having to scan anything or interact with anyone. Major outlets published pieces about how problematic this business was and how it was intended to kill authentic mom-and-pop bodegas.
After raising over $45 million in VC funding and opening 1,000 kiosks around the country, eventually rebranding as Stockwell to avoid some of the backlash, the company shut down in 2020. But the founders still got their payout. 365 Retail acquired Stockwell for an undisclosed amount in August 2020, barely a month after the company shut down. Bodega/Stockwell’s invasive tactics were not new or unique. They were just too obvious about them.
Blank Street Coffee, a chain that became ubiquitous seemingly overnight around 2022 in New York, had a similar, if less obviously impersonal, business model. Their stores have low staff counts and low overhead because the drink-making process is automated—“baristas” simply have to push a button.
New Yorkers were outraged when Blank Street opened across from Everyman Coffee in Williamsburg while stating the area was devoid of coffee options. Unlike Bodega, Blank Street is still in business. To someone who hasn’t read all of those articles, it looks like any other coffee shop.
The more successful VC-funded businesses are ones that manage to hold on to an image of specificity, locality, and community, even as their loyalty shifts from customers to investors. As Foxtrot sought to expand its brick-and-mortar presence, it adopted all the standard elements expected of a chain geared toward high-income millennials. Platitudes about local business and community. Minimalist design. A whitewashed version of a signature ethnic food—in this case, breakfast tacos.
A gushing 2022 review in The New Consumer stated: “What’s unique is how Foxtrot has integrated [coffee, wine, and convenience] into a neighborhood retail space that’s welcoming and fun—a ‘third place’ where you might actually want to spend time; where there’s been consideration and creativity applied to the user experience.”
But how unique is it really? “Starbucks’s brand was community, right?” says Alkon. Starbucks famously referred to itself as the “third place” in its 1990s advertising campaigns.
What Starbucks did, and what Foxtrot attempted to do, was take these values, like community, locality, and sustainability, and turn them into branding strategies. Alkon says this can be problematic, because it allows consumers to think they’re supporting a certain type of ethical business but that business doesn’t actually deliver on those values.
Toni Chávez, who joined Foxtrot as a barista just months before it shut down, thought that they had found a community. Chávez’s managers at Foxtrot—and the customers they saw each day—seemed more interested in them as a person than those at their former job at a Target Starbucks. But when the company shut down, Chávez says, they realized this community was never really a priority for the company.
Foxtrot sold local Chicago products in its stores, but its biggest suppliers were national chains. Initiatives like its “up and comers” program, meant to showcase emerging businesses, could be brutal in reality. Palita Sriratana, founder of the sauce company Pink Salt, won that competition in 2023. This meant Foxtrot demanded she triple her production capacity in a matter of months. She was staying up late hand-labeling items, getting her friends and family to pitch in as much as possible, and forgoing sleep. After all that, she says, Foxtrot was largely absent when it came to promoting and selling her products. Several locations never even reordered her sauce.
Foxtrot’s compostable packaging for its cafe items also lent it the appearance of a business that values sustainability, securing a spot on a list of sustainable Chicago businesses. Yet the company flew its chief executive officer from California to Chicago regularly throughout 2023 and wasted enormous amounts of food, according to numerous former staff members.
Abby Stinson, a former Foxtrot store manager, says this is what frustrated her most about her job. On one occasion, she remembers filling two fifty-gallon trash cans with breakfast tacos.
Those tacos were made at Foxtrot’s “commissary,” a warehouse in Pilsen, a newly gentrifying and primarily Mexican neighborhood several miles south of Foxtrot’s store locations.
María, who assembled tacos and other grab-and-go items at the commissary, says she’d seen her co-workers get injured from the repetitive motion of making around 12,000 tacos a week. María, last name withheld, had to stand while being interviewed due to back pain. But she says she has never minded her work. She is known to be exceptionally fast at making tacos. While other workers complained about the refrigerator-like temperature in the commissary, she says she prefers being cold to being hot. Everything about the job was better than her past work as a housekeeper. She had community. She had health insurance. She was learning multiple skills and making nearly $20 an hour, when before she had only made minimum wage.
María had been working for Foxtrot for nine years when they shut down in April. Losing the job meant losing her income, her health benefits, and her community.
“I think one of the things that’s been the toughest for me is being on the job hunt again,” she tells The Progressive. “I hadn’t kept [up] with contacts or with references. I don’t really know a lot of people.”
When Foxtrot shut down, the commissary workers were hit hardest, particularly those who don’t speak English. Javier, last name withheld, another food assembly worker at the commissary, is struggling to afford his liver medication. “It was kind of messed up,” he says. “We’d paid for insurance through the end of the month, but they suspended it when they shut down,” he says. “Some people had to miss doctor appointments or pay out of pocket.” With health insurance, his liver medication was $40 a month. Without it, it’s $400. For commissary workers who are undocumented, it is uniquely challenging to access unemployment benefits.
The episode was a perfect illustration of how a company like Foxtrot runs. Workers like María injuring themselves making tiny breakfast tacos, many that would end up in a dumpster, others selling for $4 apiece, a price that consumers might convince themselves is justified by the store’s fancy atmosphere and compostable takeout containers.
Now, many former commissary workers are struggling to find full-time work. Meanwhile, Mike LaVitola, the co-founder of Foxtrot, was already planning to reopen the company mere weeks after it shut down. He worked with Further Point Enterprises, a venture capital firm that bought Foxtrot’s assets in a liquidation sale in May, to secure leases for some of the old locations in Chicago and Dallas.
When some of the Foxtrot locations reopened in September, the company did not reopen the commissary.
Some of the most successful VC-funded coffee chains started out as local specialty shops. Chobani acquired La Colombe in 2023, after the chain had received hundreds of millions in VC investment. Blue Bottle had a similar trajectory, with Nestlé buying a majority stake in the company in 2017. The customers who loved these shops at the beginning now frequently claim the offerings have become disappointing as they no longer focus on making the best coffee.
According to insiders at the original Foxtrot, the goal was always a similar kind of acquisition. And it could still happen for them.
Since its shutdown in April 2024, co-founder Mike LaVitola has been trying to distance himself from the original Foxtrot, though he remained on its payroll until the company shut down, according to bankruptcy documents. He has said his new venture with Further Point Enterprises will be different. The company will be more careful, more methodical, in its expansion. But Foxtrot 2.0 is already being sued for continuing to use equipment that the original company rented and never paid for or returned.
One employee tells The Progressive that the rebooted company isn’t really training its staff. Nobody knows how to make a lot of the coffee drinks. They’re throwing out huge quantities of food each week. As of this writing, five people have already quit at one location less than a month after it reopened. One employee quit via a group text chat, writing, “It’s clear Foxtrot 2.0 is more focused on rapid growth than it is making sure the very basics of HR are in place.”
The new Foxtrot seems as likely as the old one to run itself into the ground and leave once vibrant neighborhoods a little bit flatter. That won’t necessarily stop the VC investment cycle from elevating it to dizzying new heights.
The Progressive reached out to Foxtrot’s representatives, but they did not respond to questions in time for publication.