Discount grocery operator Yellow Banana pitched itself to city officials as a “business with a purpose,” operating 38 stores nationwide. And in return, they negotiated a multimillion-dollar deal to refurbish and reopen six Chicago Save A Lot stores within two years in neighborhoods lacking access to affordable and fresh foods.
Yellow Banana promised to do better than the previous Save A Lot operators, criticizing them in 2022 for abandoning neighborhoods with “virtually no heads-up to the community.” And yet Yellow Banana itself has since shrunk to just one open store, the Chicago Sun-Times has found.
During the past two years of blown deadlines, altered timelines and 16 store closures, the Ohio-based grocer has racked up unpaid tax and utility bills, health code violations, business fines and lawsuits — bills amounting to more than $2 million, a review of public records shows.
Yellow Banana is in line for more than $20 million in city and federal funding, including $13.5 million from the city of Chicago if it hits its city-set deadline in April.
But the financial challenges piling up against Yellow Banana raise questions about whether it will be able to fulfill its obligation and about why city officials are counting on a company that has fallen short of its promises.
The company’s debts stem from a number of vendors, utility providers, property tax authorities and municipalities, records show. The latest lawsuit, filed last month, accuses the company of stiffing a Michigan grocery supplier of $924,000 in unpaid bills.
Yellow Banana officials didn't respond to messages seeking comment.
Thomas Lys, a Northwestern University Kellogg School of Management professor, describes Yellow Banana as “insolvent” after the Chicago Sun-Times asked him to review the company’s 2022 balance sheet, which was used during negotiations with the city, and its debts.
“When I look at this balance sheet, it’s a company that’s not good at doing whatever it’s doing,” Lys says. “I don’t see anything here that would give the people on the South and West sides any hope. Understand, all I know is what’s been conveyed to me. But this is a company that can’t pay $800 for its utility bill.”
Shortly after incorporating in 2021, Yellow Banana became one of Save A Lot’s largest partners, with 38 stores across Illinois, Ohio, Florida, Texas and Wisconsin, after Missouri-based Save A Lot switched in 2020 to a wholesale model in which independent retailers operate the stores.
Yellow Banana’s owners include CEO Joseph Canfield, a businessman who has worked in real estate, construction and a hockey company, and former Yale Law School classmates Michael Nance, Ademola Adewale-Sadik and Walker Brumskine.
They sought to turn what they described as disinvested Save A Lot stores into assets for communities with predominantly Black residents, when its plans to revamp their stores with city funding were announced in 2022.
Records show the financial problems began to snowball after its agreement with the city of Chicago was finalized in March 2023 — most of the lawsuits filed by vendors say Yellow Banana stopped paying them soon after.
Since signing the deal with the city, Yellow Banana has lost control of 13 stores to Save A Lot, sold four and shut down 16 locations. As part of the city deal, it also temporarily closed five Chicago locations for renovations, leaving only its Englewood store open.
Yellow Banana opened the Englewood location at 832 W. 63rd St. in 2023 — to uproar from neighbors — with the help of financing from former tenant Whole Foods. That store and with a location in Washington Park at 344 E. 63rd St. weren't part of the city’s six-store funding deal.
Save A Lot spokeswoman Sarah Griffin says the West Garfield Park store at 420 S. Pulaski Road will open Thursday. She says other stores will follow later this year, with “neighborhood celebrations [planned] later this fall.”
Griffin did not respond on details about Yellow Banana’s financial situation and lawsuits.
She says “the Save A Lot and Yellow Banana teams have been working diligently to overcome several challenges to reopen Pulaski and the five other Chicago area locations. With these developments, Yellow Banana will focus its resources toward the success of the seven stores in the Chicago area, allowing the company to optimize its footprint and strengthen its portfolio for the future."
City Department of Planning and Development spokesman Peter Strazzabosco says the city’s contract is “an incentive for Yellow Banana to operate these stores with the highest levels of professionalism and service. If any one of the six stores closes within the next 10 years, the City can default the agreement in its entirety and recoup all funding expended for every location.”
Regarding Yellow Banana’s lawsuits, Strazzabosco says that not all debts and legal troubles could prevent business openings, though all city debts will have to be resolved before the company can claim city funding.
The relatively small amounts of some unpaid bills speak to the precarious financial picture of the company, Lys says.
Some of its debt even predated the city deal. Before seeking the City Council’s approval, City Hall required the company to “fully address” its city debts, records show. If the company is insolvent or unable to pay its debts, or closes any of the six stores within 10 years of opening or files for bankruptcy, it could be on the hook to repay all the city money.
In October 2021, one month into operating the stores, Yellow Banana failed a city inspection at the West Garfield Park store because it had no retail license, and inspectors “observed live rodent activity and 700+ droppings on site.”
City inspectors found Yellow Banana’s stores were operating without a retail establishment license on 13 occasions. They also dinged its stores in 28 cases for selling expired products, records show.
Customers have filed other complaints with Chicago's 311 hotline, complaining of rotten food, violent threats made by employees, overflowing garbage and tall grass and weeds.
Other citations were for food that was two years past its expiration date, 88 packages of expired medication and items that “deceptively” rang up at a higher price than originally marked.
As of July 15, the remaining balance from violations was $23,407. By Aug. 26, records from the Department of Finance show those debts had disappeared. The department didn’t say whether the debts had been paid.
Yellow Banana still owes more than $167,000 for property tax bills on six Chicago stores that were due on August 1.
For two locations — Gresham, at 7908 S. Halsted St., and Washington Park — the company filed property tax appeals to try to lower their bills. The Washington Park store’s $35,000 tax bill, over half of which was due in March, was paid on Aug. 5. Shuttered in May 2023 following a break-in, the store remains boarded-up.
Stores in South Shore and Morgan Park haven’t paid several thousand dollars in utility bills as of July.
In Cuyahoga County, Ohio, records show the company has never made property tax payments on a Cleveland office, bought in 2021. About $29,000 is outstanding.
In Dallas, $27,000 in property taxes is due for one of the company’s two now-shuttered Texas stores, including $8,000 from interest and collection fees. Records show Yellow Banana in 2023 paid by check, but it bounced.
In Florida, more than $55,000 in utility bills, property taxes and late fees were outstanding when Yellow Banana sold four stores to Ascend Grocery last fall. The accounts’ prior bills were paid in full following the sale.
The latest vendor to sue Yellow Banana is grocery supplier Sherwood Food Distributors, which cites unpaid bills from July 2023 through October 2023, for $923,784 owed, according to the lawsuit filed on Aug. 13 in Cuyahoga County. The attorney representing this and several other plaintiffs declined to comment.
Others going after Yellow Banana in court: a fire protection company for $5,100 of unpaid contracted 2023 fire-safety services for a Milwaukee. store and Rolling Frito Lay Sales, LP — suing for $14,000 from 2023. Many creditors have struggled to serve company officials using the address still listed on Yellow Banana's website.
The company was ordered by a Cleveland judge on August 12 to pay $5,091, plus interest to Coca-Cola Southwest Beverages for bills to Dallas stores from 2022.
Lawsuits from creditors who claimed another $869,000 in unpaid bills since 2022 have since settled or been dismissed after the parties didn’t go to court.
Instead of adding stores to minority and disenfranchised communities, Yellow Banana has been shutting them down — about 40% of its stores closed.
Records show three of its Ohio locations were liquidated in an auction this spring.
Griffin blames “challenging market factors” on Yellow Banana’s “difficult decision to close a number of the company’s locations that were not performing.”
Earlier this year, Yellow Banana transferred ownership of its 13 remaining stores outside of Chicago to a new entity controlled by Save A Lot, records show. One of the stores has since closed.
“As a commitment to the communities we serve and to ensure continued food access for customers, Save A Lot has assumed operational and financial control of the group’s stores across the Cleveland, Milwaukee and Rockford, Ill. markets,” Griffin says. “On a case-by-case basis, Save A Lot will provide additional support to stores where there’s a demonstrated need for its hard discount program.”