A Southern Season, Chapel Hill's landmark gourmet food store for more than 35 years, has been sold to a local investment firm with plans to expand the brand throughout the Southeast.
"This is not a 200-store chain, but it could be a 15-store chain," said Clay Hamner, a Chapel Hill entrepreneur and managing partner of TC Capital Fund, which bought the firm from owner Michael Barefoot this week. Hamner said Charlotte, Atlanta and Birmingham could be future locations.
Barefoot, 61, started the small specialty food store in 1975. He transformed it over the decades into not only a gastronomic destination for the state's wine and food lovers but also a vibrant mail-order business with more than $30 million in combined annual sales.
Tuesday evening's announcement of the sale capped several months of rumors that the store has been struggling financially.
Barefoot explained that his business took a huge hit with the recent economic downturn. Much of his business relies on gift basket and retail sales around the holidays. "2008 - for us and all small businesses - was just killer," he said Wednesday.
In response, Barefoot said he laid off about two dozen employees, instituted a 10 percent pay cut for all employees, shortened store hours and eliminated inventory.
Beyond that, A Southern Season is surrounded by competition. In 2007, Trader Joe's, which has its own rabid following among foodies, opened in nearby Eastgate Shopping Center. In 2008, a nearby Whole Foods store introduced an 11,000-square-foot expansion.
It was during this time that Hamner approached Barefoot about investing in A Southern Season. Barefoot initially declined, but two things changed his mind. First, he was nearing retirement age, and second, the store's recovery to peak annual sales of more than $30 million was slower than expected.
Those involved declined to disclose financial details of the deal.
However, Barefoot will remain as a consultant for five years. He and company Vice President Tim Manale are still shareholders. The company's third partner and chief financial officer, Briggs Wesche, will remain an employee but will no longer be an owner.
"We all feel like it's a very positive thing," Barefoot said about the sale. "We're going to be able to do things that we haven't been able to do."
Hamner has brought in Larry Shaw as company president. Shaw, who lives in Chapel Hill, worked for Nordstrom. He was an executive vice president at The Vermont Country Store when its annual sales increased to nearly $100 million from $40 million. He also worked as a consultant for Eddie Bauer, J. Jill and Green Mountain Coffee.
Beyond improving and redesigning the company's website, Shaw said his main goal is to improve customers' experience in the store.
A couple of changes were visible Wednesday: Employees had ditched their more formal uniform of black shirts and black pants for golden A Southern Season T-shirts, black pants and black aprons. The front entrance now includes a hostess stand for the Weathervane restaurant, which at times felt disconnected from the store.
Hamner, who also teaches at UNC's Kenan-Flagler Business School, says he usually invests in medical or software companies, wholesalers and manufacturers. He does occasionally invest in retail, including Kleinfeld, a Manhattan bridal boutique made famous by TLC's television show, "Say Yes to the Dress."
TC Capital Fund, which bought A Southern Season, is a joint venture between Hamner's Carrboro Capital and Tryon Capital Ventures. But Hamner explained that the investors all have connections to the Triangle and were intrigued by the possibility of building a well-regarded local brand.
"This is an important part of the Chapel Hill community," he added.
News researchers Brooke Cain and David Raynor contributed to this report.
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