âThe mistake I made, as the head of the company, was to expand outside of Michigan, using debt to do it,â Sellers told Crain’s in an interview earlier. this month. âI was under the false assumption that because the brand was so popular in Michigan and would translate very easily in other states. And what we found out was that in other states, we were just seen like any other chain. Whereas in Michigan we were seen as a hometown hero like Bob Seger. “
At the time of filing for bankruptcy in June 2020, after the COVID pandemic began to wreak havoc on the economy, particularly in the service sector, BarFly said it had between $ 1 million and $ 10 million in assets and liabilities of between $ 10 million and $ 50 million. million. The landlords had started suing the business for non-payment of rent, as Crain’s reported at the time.
HopCat had started closing locations even before the bankruptcy, including in the Lincoln Park neighborhood of Chicago and Royal Oak, which closed in May 2020 after negotiations with its owner failed.
For Travis Baldwin, co-founder and director of Dallas-based investment firm Congruent Investment Partners LLC, the mistakes the sellers acknowledged were also apparent.
âMistakes were made,â Baldwin told Crain’s. “(HopCat) grew too far from the state, (and) got too far from the bread and butter they were targeting.”
HopCat has kept two locations open outside of Michigan, Indianapolis and Lincoln, Neb.
Granted, HopCat and the other BarFly restaurants that were bought out by the bankruptcy – Stella’s Lounge and Grand Rapids Brewing Company, both located in downtown Grand Rapids – were already facing huge headwinds.
Michigan restaurants have faced more than 460 days of “closure, capacity restrictions and heavy regulatory control that have forced more than one in six Michigan restaurants to close their doors for good,” according to a statement by June from Justin Winslow, president and CEO of the Michigan Restaurants and Accommodations Association, based in Lansing.
Lidvall, a restaurant industry veteran who was named CEO of BarFly after its takeover, acknowledged the headwinds but noted that restaurant employee morale remained high despite all the uncertainty.
Like many other industries, Lidvall highlighted supply chain âdisruptionâ and tight labor market as the most serious challenges the company currently faces. On the first point, Lidvall said the prices of commodities and supplies were slowly rising, and the labor shortage was particularly acute in the western part of the state, near the base of operations. by HopCat.