California-based Red Bay Coffee files for Chapter 11 bankruptcy protection

Red Bay Coffee now operates a roastery and five retail outlets across the California | Photo credit: Red Bay Coffee/Facebook

Californian coffee roaster and café chain Red Bay Coffee has filed for Chapter 11 bankruptcy protection amid ‘spiralling costs and related uncertainties’. 
 

Founded in 2014 by Keba Konte, Red Bay Coffee now operates a roastery and five retail outlets across the Californian cities of Oakland, San Francisco and Berkeley. 

The business filed for bankruptcy in late August 2024, citing the long-term impact of the pandemic and increasing costs regarding to two lawsuits – a sexual harassment case first filed in 2018 and a breach of contract incident.  

Chapter 11 bankruptcy protection enables a business or individual to restructure or liquidate their assets in a court-supervised process. The action prevents enforcement actions and other legal proceedings against the debtor. 

According to The San Francisco Business Times, Red Bay Coffee’s assets amount to more than $250,000, against estimated liabilities of $3.3m. The coffee roaster and café chain incurred a net loss of more than $850,000 between January-July 2024. 

Konte is acting as debtor-in-possession – meaning he retains property to which creditors have a legal claim under a lien or other security interest – while the Chapter 11 bankruptcy proceedings advance. 
 

While the total US branded coffee shop market continue to grow, driven by the sustained outlet growth of larger chains, a number of smaller, more community-focused operators have struggled amid rising costs, labour shortages and the cost-of-living crisis. 

Californian coffee farm group Frinj Coffee filed for Chapter 11 bankruptcy in January 2024 – a move founder Jay Ruskey described as a ‘strategic semi-pause' to enable the business to restructure. 

In April 2024, Chicago-based coffee shop and boutique grocery chain Foxtrot closed its 33 stores with immediate effect after finding ‘no viable option’ to continue the business. Foxtrot has since begun reopening some sites after selling its assets to venture capital firm Further Point Enterprises. 

Additionally, Colorado-based coffee roasters Ink! Coffee and Switchback Coffee Roasters filed for Chapter 11 bankruptcy in June and August 2024 respectively, while South Dakota-based specialty purveyor Cottonwood Coffee took the same course of action in July 2024.