Chicago craft beer innovator, Metropolitan Brewing, has filed for bankruptcy due to declining sales, excessive debt, and a continued rent dispute at its prominent taproom and brewery. The firm asserts that without a reconfiguration of its debt—over $1 million owed in arrears and fees—it cannot sustain the upcoming harsh winter.
Initially established in a Ravenswood warehouse in 2008, Metropolitan Brewing won acclaim with its German-style lagers, progressively gaining recognition. In 2017, the locale of the brewery shifted to a capacious facility at Rockwell on the River, a commercial redevelopment in the Avondale district, according to Crain's Chicago Business.
Yet, post-relocation, Metropolitan's economic conditions have crumbled, amplified by a quarrel with landlord, Rockwell Properties, over leasing terms. The firm admitted in its October 3 bankruptcy petition that they are unable to pay the outstanding rent claimed by Rockwell Properties, although they are capable to continue to cover the market rate.
The bankruptcy filing discloses that Metropolitan inadvertently rented a 33,000-square-foot area—9,000 square feet more than planned—during negotiations, as detailed by the Chicago Tribune. The founders of the brewery, divorced couple Doug and Tracy Hurst, found this disparity during a lease review in 2019, leading to the halt of rent payments to Rockwell Properties in late 2019 after seemingly overpaying by $130,000 in the prior two years.
The global pandemic has further strained Metropolitan's finances, as it has for many businesses across the nation. The company still owes North Carolina's Live Oak Bank more than $1 million for an equipment loan, besides a debt of over $386,000 to the Small Business Disaster loan, both incurred during the 2020 health crisis.
As the craft brewing sector tentatively recovers from the pandemic's impact, Metropolitan confronts hardships beyond its debilitating debt. Despite stable taproom sales, retail numbers for its canned beers are declining, reflecting a larger industry trend. Bart Watson, chief economist for the Brewers Association, reports that craft beer volume sales fell 10% in 2020, rose 8% in 2021, remained stagnant in 2022, and have dipped 2% this year, as per the Chicago Tribune.
In 2022, Metropolitan Brewing generated a gross revenue of $2.16 million through distribution, taproom sales, and contract brewing for a smaller local brewery. They anticipate similar revenue generated in 2023. According to their bankruptcy filing, sufficient profits for the brewery's operation would be procured if the debt and lease are restructured. Absent such restructuring, they may have to consider sale or liquidation.
Doug Hurst, Metropolitan's chief brewer, remains optimistic of bringing the brewery out of debt if agreements can be made with Rockwell Properties and their creditors. The urgency to find a resolution remains paramount for Metropolitan Brewing as they strive to reorganize their debts, recast their lease, and potentially obtain rental forgiveness for part or the entirety of the $1 million arrears, according to the Chicago Tribune.
