Sometimes on an episode of “Shark Tank,” Mark Cuban or one of the other sharks might congratulate someone on the show for building a good business.
It's kind of code for saying that they've created something that should make them a living, but not the huge profits that make a company worthy of investment.
This is not an insult: most businesses are considered successful if their owners can live decent lives, pay some employees and contribute to the economy.
Related: Struggling whiskey brand files for Chapter 11 bankruptcy
Developing this type of business is even more impressive when it is done in an area that people are passionate about. It is really difficult for your yoga studio, photography business, or other passion activities to be successful.
This is also true for coffee and brewery-related businesses. There is a lot of competition in these spaces because many people are passionate about beer and coffee.
During the COVID pandemic, many people who had created successful breweries, roasteries, and coffee shops saw their dreams cut short. They lost business or had to shut down completely for months, forcing them to take on more debt with high interest rates.
Now, while Covid is largely an unpleasant memory, it has left a deep trail of destruction in the spaces of coffee shops, roasteries and breweries. In most cases, that’s because these were nice, modestly profitable businesses that couldn’t afford the extra expenses.
Now, debt, rising costs and higher labor rates have forced another popular roastery and coffee shop chain to file for Chapter 11 bankruptcy.
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Switchback has earned a solid reputation
Switchback Coffee Roasters had modest beginnings when Brandon DelGrosso and a friend founded the company in 2010. The pair began roasting coffee in a garage with the humble goal of becoming a catalyst for specialty coffee in Colorado Springs.
It was a slow road to success for the couple.
“While there were already some excellent local roasters, we felt there was a lack of emphasis on exploring the nuances of acidity and the true potential that coffee had,” DelGrosso shared. “With determination, we acquired a small eight-pound roaster and set up operations in a garage, focusing on roasting for our immediate circle of family and friends.”
These efforts paid off as Switchback received a Bronze Award in the Colorado Springs Independent.
“The following year we received the Silver award, and in 2013, in just our third year, we proudly achieved the Gold award,” he added.
Switchback now operates two cafes and its own roastery. It sells beans nationally and has a great reputation for quality in the coffee industry.
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Switchback Coffee brand files for Chapter 11 bankruptcy
Switchback Coffee did not comment on its Chapter 11 bankruptcy filing on its website or on its facebook and instagram pages. The company is still accepting online orders and appears to be operating at full capacity.
The company filed for Chapter 11 bankruptcy protection on Aug. 19 in the U.S. Bankruptcy Court for the District of Colorado. Switchback Coffee reported having between $50,000 and $100,000 in assets and between $500,000 and $1 million in liabilities.
In the filing, the company said funds would be available to unsecured creditors. Switchback also noted that its assets “include perishable property or assets that could deteriorate quickly or lose value without attention.”
More bankruptcies:
- Home Depot rival in trouble files for Chapter 11 bankruptcy
- Popular Italian restaurant chain files for Chapter 11 bankruptcy
- Another struggling transportation company files for Chapter 11 bankruptcy
The coffee roaster and producer said it has between one and 49 creditors. Switchback Coffee had less than $1,000 in its bank accounts at the time of the lawsuit.
Switchback's largest creditor is the city of Colorado Springs, to which it owes just over $55,000. It also reported an “unknown” level of debt to the IRS.
The company did not present a plan to fund its continuing operations as part of its initial filing.
