Balducci's Closing Its Only D.C. Store in Reorganization

By Ylan Q. Mui
Washington Post Staff Writer
Saturday, April 11, 2009

Recession-minded consumers who once embraced artisan cheeses and fine olive oils are scaling back, and among the losers is gourmet grocer Balducci's.

The embattled chain is planning to shut down its only store in the District at the end of June.

The store on New Mexico Avenue near American University is one of four locations -- the others are in Ridgefield, Conn., and New York City -- scheduled to close under a company reorganization. Balducci's spokeswoman Jennifer Barton said the stores in Bethesda, McLean and Alexandria will remain open, along with the ones in Greenwich and Westport, Conn., and Scarsdale, N.Y.

Balducci's has grappled with instability in its top ranks over the past decade, a time of increased competition from high-end food retailers.

"They have a model which is pricey, and right now the economy is not tailored toward pricey," said Jeffrey Metzger, publisher of trade magazine Food World. "It's a difficult place to shop in terms of your weekly needs."

Barton declined to comment on the reason for the closures or the fate of the stores' employees. The departure of Balducci's on New Mexico Avenue is particularly poignant for local shoppers because it was one of the first specialty food stores in the District and once home of the now defunct Sutton Place Gourmet.

Sutton Place opened about three decades ago offering 400 cheeses, 150 brands of beer and gourmet-to-go pasta and pastries -- now standard fare, even at traditional supermarkets, but a high-end gamble at the time.

Annie Weissman, 26, said she grew up shopping at Balducci's and learned how to cook by experimenting with the exotic fare she picked up there.

"There are so few institutions left that really feel like they have a face as well as a name -- you know, kind of a neighborhood feel," she said.

But even loyal customers like Weissman have scaled back. Weissman said she made risotto recently and normally would have bought truffle oil at the store. Instead, she used regular mushrooms, unwilling even to splurge on morels.

"I hate to say it, but we're probably partially responsible" for the closing, she said. "You just find ways to pull flavor out of tougher places to find it."

During the 1990s, Sutton Place had ambitious plans for expansion and bought Balducci's, a New York institution, for $25 million.

The move saddled Sutton Place with debt and halted its plans for growth. In 2003, local entrepreneur and foodie Mark Ordan bought the company for $50 million with backing from Bear Stearns Merchant Banking and renamed all the stores Balducci's.

By 2006, however, Ordan had left the company for a position at developer Mills Corp. and now works as chief investment and administrative officer at Sunrise Senior Living of McLean. The new owners of Balducci's struggled to find an identity in the rapid rise of chains such as Whole Foods and Trader Joe's and the growth of gourmet items at supermarkets such as Giant and Safeway.

Then last spring, Bear Stearns collapsed in the face of a liquidity crisis and was taken over by J.P. Morgan Chase. The merchant banking division eventually spun itself off into a new entity under the name Irving Place Capital.

Last summer, the firm sold its four High Noon sandwich shops -- which Ordan founded and merged into the Balducci's family -- to Seattle-based Organic 2 Go for an undisclosed sum. Although it has closed a store in Reston and dropped plans for a store in Penn Quarter after a long flirtation, the company said last fall that it intends to open a Balducci's in Dubai.

Longtime customer Lorraine Rose has shopped at Balducci's in the District since the beginning, through the changes in management and strategy as well as the arrival of competitors. She frequently ordered a prepared pesto pasta dish with sides of fried Italian artichokes and tomato and mozzarella salad. "It was so deluxe," she said.

Lately, she said, she has noticed that the store has felt empty. It has been sending out more coupons and holding more sales. The staff has seemed to turn over more frequently. She could sense the end was near.

"I've had this fatalistic viewpoint that this can't last much longer," Rose said. "But I kind of felt like it was there for me."

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