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November 18, 2016 1:30 p.m. Updated 11/18/2016

The Vinegar Factory To Close Its Doors To Retail

Eli Zabar will convert brunch spot to food production and groceries-on-demand

After a renovation, the Vinegar Factory will reopen as a commissary kitchen to stock Zabar's other ventures.

The easternmost outpost of Eli Zabar’s uptown foodie empire will shut down as a retailer on Nov. 23. Behind the change is a need to accommodate increased demand for home grocery delivery as well as prepared foods.

After a renovation, the Vinegar Factory, which has served Yorkville as a grocer, a brunch spot and an event space since 1993, will reopen as a commissary kitchen to stock Zabar’s other ventures. (Thanksgiving catering won’t be affected, and the site will still have an event space.) Vinegar Factory employees will find jobs at the other branches.

Zabar was looking at necessary repairs at the former mustard and vinegar factory, which was built in the 1890s.He considered how the space could best serve an operation that now includes a flagship market, four Eli’s Essentials prepared-foods stores—one of which morphs into a wine bar at night—a wine store, the café and shop E.A.T., the restaurant Eli’s Table, grocery delivery, catering, gift baskets, a kosher bakery, a wholesale bread business and more than 700 employees.

“All these things take space,” he said. “We’d have to move out to the boroughs and we’re not going to do that.”

Zabar’s longevity in the neighborhood—he opened his first venture, E.A.T., more than 40 years ago—made it possible for him to buy a collection of properties, including the former vinegar factory, that he is now able to modify to suit the needs of a changing business.
“By owning the site, I can do what I want there,” he said, adding area rents are “beyond what food operations can pay.”

The increased production space will allow him to bolster the offerings and staff at the flagship Eli’s Market at East 80th Street and Third Avenue, and to satisfy the growing demand for grocery delivery. He sees both retail and delivery as quintessential businesses at a time when people are too busy to shop during the week.

Zabar also believes that in both of those ventures his markets have an advantage over the larger grocery chains. “We’re not anonymous,” he explained. “There’s a sense of trust.” To use the home shopping service, “you call on the phone and speak to Milton,” he said. Home shopping has been growing 10% to 20% each year, and a large portion of the Vinegar Factory’s customers already use home shopping exclusively, he said.

By revenue, retail is the largest part of Zabar’s business. Increasing production space will allow him to open more locations, he said.

“Now when sites are brought to my attention, I don’t have to say, ‘I wish I could consider that, but I can’t,’ ” he said. He thinks the area below East 76th Street is still underserved, but he draws the line at expanding his business to the foodie haven of Brooklyn. “It’s too far from my production facility to make it fresh and deliver it that day,” he said.

The Vinegar Factory is one of four sites Zabar owns on the block of East 91st Street between First and York Avenues. That’s where bakers turn out baguettes and croissants, decorated cookies, rugelach, and babka. Up on the second floor of what’s now the Vinegar Factory, big pots simmer stock and soup and a designated fryer makes potato chips sold at Eli’s Essentials and Eli’s Table. On top of two of the buildings are 22,000 square feet of greenhouse space, where Zabar has been experimenting with hydroponic tomatoes, vertically grown strawberries and greens since 1995.

Zabar has enlisted an architect to renovate the Vinegar Factory, but the exact plans are still in flux. He intends to keep the factory charm intact but acknowledges “there will be disappointed customers.”

Correction: Soups are made on the second floor of the Vinegar Factory building. One Eli's Essentials location becomes a wine bar after hours. These facts were misstated in an earlier version of this story, published online Nov. 18, 2016.