Brooklyn’s namesake roasting company is another casualty of the coronavirus — filing for Chapter 11 bankruptcy protection on Oct. 21.
Brooklyn Roasting Company— founded in 2009 by Jim Munson, a former partner at The Brooklyn Brewery— plans to close its two retail locations at 25 Jay St. in Dumbo and 50 W. 23rd St. in the Flatiron District while reorganizing to focus on its wholesale business.
The board at the popular coffee producer credited their upcoming closure to a series of misfortune events — compounded by the pandemic this year — beginning with a failed 2018 deal to be purchased by an investment group that included the former CEO of Dunkin Donuts for $22 million, which investors eventually backed out of, according to court documents.
The company’s failure to cut costs while ramping up staff in anticipation of a closed deal left them in a poor financial condition to start off 2019 — with 2018 being the first year the company did not have any growth since its founding and reported losses of $1.4 million.
On top of their losses, a lender was seeking repayment of a $2.1 million loan that the company could not pay.
A managing partner at Brooklyn Roasting Company agreed to lend the company the funds needed to pay the loan, according to court documents, which led to the coffee makers making considerable gains into 2020 — but it apparently wasn’t enough to keep them afloat during the unforeseeable situations brought on by the ongoing coronavirus pandemic.
With the state-mandated shutdowns, Brooklyn Roasting Company’s revenue stream from its two cafes completely dried up and has only seen a slight return after opening with limited take-out. Meanwhile, its wholesale earnings dropped dramatically as major buyers like Columbia University and Goldman Sachs discontinued their orders, most likely due to a lack of humans on their premises.
Brooklyn Roasting Company secured a Paycheck Protection Program loan for $727,000 from the federal government which buoyed operations until August, the court documents state, when funds ran dry and management “realized it no longer had a realistic possibility of paying its past-due rent or rent that would become due in the foreseeable future for any of its café locations.”
Without the burden of its retail businesses, Brooklyn Roasting Company is hopeful its wholesale sector will once again prosper, the documents said, as it will keep its management team and the production site at Brooklyn Navy Yard.
“BRC believes that if it is relieved of the rent obligations of its shuttered cafés and is able to focus on its wholesale business, it will remain a viable and healthy business with an opportunity to grow again over time,” court documents stated. “Its production facility, core management team, and good reputation in New York remain intact.”
This story first appeared on AMNY.com.