Red Bay Coffee, a California-based coffee chain with an investment from former McDonald’s CEO Don Thompson, declared bankruptcy after cost pressures from COVID and legal cases.
The brand lists seven brick-and-mortar locations on its website (one temporarily closed), a coffee van, and a roastery.
Founded in 2014 by artist and entrepreneur Keba Konte, the concept has been a pioneer in the “fourth wave” of coffee, aiming to create a more inclusive and community-connected experience. In 2019, Red Bay Coffee completed a round of funding led by several investors, including Thompson, who served as McDonald’s CEO from 2012 to 2015.
Despite its success and innovative approach, the company faced challenges that led to its financial downfall. The pandemic’s impact on the business, coupled with ongoing litigation—one involving claims from a former employee alleging sexual harassment and not being paid full wages and another related to a breach of contract with a former landlord—placed a considerable strain on the company’s finances. In addition to these challenges, Red Bay Coffee has been navigating an investigation by the U.S. Equal Opportunity Commission related to claims from another former employee.
As of the bankruptcy filing, Red Bay Coffee’s assets included approximately $27,200 in cash and additional personal property valued at around $224,000. The company also reported significant liabilities, including $2.2 million in general unsecured liabilities (debts owed to external creditors with no close relationship to the company) and $1.1 million in insider general unsecured liabilities (debts owed to individuals or entities that have a close relationship with the company, like executives or major shareholders).
To address its financial difficulties, Red Bay Coffee filed for Chapter 11 bankruptcy with the intention of reorganizing and preserving its assets while working out its debts.
The brand joins several entities that have declared bankruptcy thus far in 2024, including BurgerFi, Red Lobster, Hawker’s Asian Street Food, Rubio’s Coastal Grill, Tijuana Flats, Sticky Fingers, Oberweis Dairy, Tocaya and Tender Greens, Mary’s Pizza Shack, Roti, Foxtrot and Dom’s Kitchen, a 126-unit Pizza Hut franchisee, a 25-unit Arby’s franchisee, a 48-unit Subway franchisee, a four-unit Dickey’s Barbecue Pit franchisee, a 17-unit Popeyes franchisee, World of Beer, Buca di Beppo, and a six-unit Alamo Drafthouse Cinemas franchisee.
