Brooklyn Roasting Company files for bankruptcy, will close shops

https://nypost.com/2020/10/22/brooklyn-roasting-company-files-for-bankruptcy-will-close-its-shops/ 

Originally appeared on New York Post

 

The pandemic has hit another beloved Big Apple hot spot.

Brooklyn Roasting Company, known for its colorful logo and flavorful coffee, filed for bankruptcy protection on Thursday and said it’s planning to permanently close its remaining retail locations at 50 W. 23rd St. and at 25 Jay St. in Dumbo Brooklyn, according to its Brooklyn bankruptcy court documents.

It will keep three other Brooklyn locations open, including at 200 Flushing Ave. and 45 Washington Ave., a spokesman said.

The company is also hoping to save its wholesale business, however, which sells to New York institutions like Columbia University and Goldman Sachs as well as the airports.

Founded in 2009 by Jim Munson, a former partner in The Brooklyn Brewery, BRC became a beloved New York brand with as many as seven locations across the city at its peak.

But its problems began before the pandemic as the company over-expanded in an effort to be acquired, according to the filing.

The coffee roaster had been in discussions in 2018 to be acquired for $22 million by an investment group including the former chief executive of Dunkin’ Donuts, the filing states. At the behest of its investors, BRC invested in new real estate and staff, but the acquisition never happened.

By the beginning of 2019, “BRC’s financial condition was poor,” and revenues declined for the first time in 2018 to $9.7 million, according to the filing.

Just as the company was getting its footing back — with revenues climbing to $10.3 million in 2019 — the pandemic wiped out more than half of the company’s retail sales. It’s wholesale business was also decimated.

It reported an “extraordinary COVID expense” year to date without providing details about the debt.

BRC received a $727,000 in federal stimulus loans, but the money ran out in August even as its sales remained “severely depressed,” according to the filing. Munson controls 13 percent of the company, the filing said.

“This was a one two punch,” said distressed asset expert Adam Stein-Sapir. “They had a failed acquisition and all the additional costs they signed up for in anticipation of that and then Covid.”