Brooklyn’s namesake roasting company filed for Chapter 11 Bankruptcy on Oct. 21, but its founder said the company is only adjusting its operations and has no plans to go anywhere.
“In other words, like many other businesses at this point, we definitely wound up in the hospital, but we are walking out and not headed towards the cemetery,” said Jim Munson. “New York City needs a great local Brooklyn Roasting Company and we have every intention of fulfilling that potential.”
Brooklyn Roasting Company — founded in 2009 by Munson, a former partner at The Brooklyn Brewery — plans to close two of its retail locations at 25 Jay Street in Dumbo and 50 W. 23rd St. in the Flatiron District while reorganizing to focus on its wholesale business.
All remaining coffee shops will stay open, Munson told AMNewYork, including the Clinton Hill location at 200 Flushing Ave., the Brooklyn Navy Yard location in Building 92 at 63 Flushing Ave., the Downtown Brooklyn location at 45 Washington St., and the Williamsburg pop-up inside the Brooklyn Denim store on Wythe Avenue.
“These are all doing good business, and our customers won’t be disappointed,” Munson said.
The board of the popular coffee shop blamed their upcoming closure on a series of misfortune events 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 $1.4 million in losses.
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, which allowed the coffee makers to make considerable gains into 2020— but it apparently wasn’t enough to keep the company afloat during the COVID-19 pandemic, according to court documents.
With the state-mandated shutdowns, Brooklyn Roasting Company’s revenue stream from its cafes completely dried up, and company has only seen small returns after opening with limited take-out. Meanwhile, its wholesale earnings dropped dramatically as major buyers like Columbia University and Goldman Sachs discontinued their orders because of COVID-19 shutdowns.
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. But then, 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 two closed locations, Brooklyn Roasting Company is hopeful its wholesale sector will once again prosper, the documents said. The coffee makers will keep their 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.”
Correction [Oct. 26]: A previous version of this article stated that Brooklyn Roasting Company’s two remaining cafés would be closing, and that the company would halt its retail business. The article has been updated to reflect that only two locations are closing, and four others are staying open. We apologize for the error.
This story first appeared on AMNY.com.
