Hopcat's Parent Company Files for Bankruptcy - Warning More to Come
CBS Detroit - BarFly Ventures, the company that owns the Hopcat restaurant chain has filed for bankruptcy. The chain that is known for its extensive list of craft brews and their famous "Cosmik Fries". The Detroit Free press reports that despite Governor Whitmer lifting executive orders and allowing restaurants to serve people again with restrictions, COVID-19 has taken a toll on Hopcat's business.
BarFly Ventures founder Mark Sellers told the Michigan House Regulatory Reform Committee that he's barely able to keep the lights on, with revenues down 100%. He told the committee, "This is not unique to us," in testimony on Zoom. "There's going to be a giant wave of bankruptcies coming very, very soon," he added.
As reported before, Michigan's restaurant industry is a $19 billion dollar business. Justin Winslow, CEO of Michigan Restaurant and Lodging Association, said since March 16th, when the first executive order closed dine-in service, each day since an average of 20 restaurants will shutter their doors forever. BridgeMI reports this is based on a survey from Mid-April that showed 4% of owners won't reopen at all.
James Beard-winning Chef Andrew Zimmern told Business Insider, restaurants need to be at 85%-90% at the capacity to be able to make it. The restaurant industry, in general, has very tight margins when it comes to overhead expenses, food costs, and payroll. So it would appear Hopcat is experiencing these challenges amid cOVID-19 restrictions.
Another restaurant that has experienced the final nail in its coffin is a Good Day Cafe in South Lyon. The restaurant was already struggling, and COVID-19 has sealed their fate. In a recent article by Hometown Life, owner Jennifer McPherson, posted on Facebook, "With the amount of changes, disruptions, new requirements and expectations that we face as a result of COVID-19, there is a whole new picture that needs to be painted; not only in the restaurant industry but on the home front as well."
BarFly plans to open its Michigan Restaurants on June 13th according to a press release, but has filed for Chapter 11 bankruptcy in an effort to restructure the company from losses it sustained during COVID-19 closures. Hopcat has had to close it's Royal Oak location because it was unable to make an agreement with the landlord. According to Eater Detroit, that location was just opened in 2017 and had $2.5 Million dollar renovation.
According to the Detroit Free Press, Sellers said: "This action should have little to no impact on our day to day business operations but will allow us to emerge as a financially stronger company and enable us to continue serving our guests, team members, and other business partners for many years to come,". Other witnesses told the House Committee that they expect people to not be comfortable sitting in restaurants and bars once the state reopens.
Bankruptcies like this will likely have an impact on other companies in the restaurant industry, such as food providers, brewers, wholesalers, and other vendors who supply restaurants with products.
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