Texas Craft Beer Eatery Chain Faces Bankruptcy: Will 5 Locations Close?

MJP –

A Chapter Eleven bankruptcy has been filed by World of Beer, a Texas company with five locations: Cypress, Katy, Lubbock, Lubbock, and The Colony.

In a year that has been tough for the restaurant industry economically, it follows other brands such as Buca di Beppo and Red Lobster.

Craft beer is the main attraction at World of Beer, a chain of casual eateries that offer hundreds of varieties at each location. These beers are meant to go with the dishes on the menu.

World of Beer has shut down 14 stores in the last year, 8 of which were company-owned and 6 of which were franchises. No information on which, if any, of the remaining stores will close has been announced as of yet.

The Chapter 11 petition does note that many facilities in Texas, including those in College Station and Fort Worth, were shuttered.

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WOB said that the restaurant’s problems stemmed in part from the franchisees’ lack of management:

While the craft beer sector was experiencing a boom, some franchisees decided to cash in on the trend without the necessary expertise, running their franchise as a side hustle.

Put simply, it seems that a few franchisees ruined the reputation of the brand due to their lack of presence or competence. That is, according to my interpretation of the statement.

The ongoing effects of COVID-19 were also cited in the bankruptcy filing:

The Debtors were able to secure PPP financing, which was a huge boon to their workers, investors, and company. However, the food and drink industry could not recover quickly enough.

WOB may probably recover from this bankruptcy case and avoid further store closures through astute reorganization.

But any mix of company-owned and franchised stores could go out of business this year or very shortly after that if the model is to be believed.