In recent months, the American coffee industry has been facing increasing difficulties due to multiple adverse factors, with several coffee companies being forced to file for bankruptcy or issue bankruptcy warnings.
Currently, coffee prices in the United States are nearly at historic highs. According to the latest inflation data released by the U.S. Department of Labor, coffee prices have risen by about 19% in the past year, far exceeding the inflation rate.
Adverse weather conditions have impacted crop yields, limiting supplies from major producing countries such as Vietnam and Brazil. The new tariffs imposed by the U.S. on producing countries have also increased costs for importers and businesses.
The largest coffee chain in the U.S., Starbucks, announced on September 25th that it will undergo a $1 billion restructuring, including the closure of some North American stores and the elimination of approximately 900 employees. CEO Brian Niccol warned in a recent earnings conference call that not only tariffs and currency inflation will affect operations, but consumers are also becoming more cautious in choosing where to spend due to financial constraints.
Some coffee companies are filing for bankruptcy.
The Blend Coffee and Cocktails, a company known for its coffee blends and rich menu, filed for bankruptcy protection in the Central District Court of Florida last week. The company, which has eight outlets in Florida, listed its assets ranging from $0 to $50,000 and liabilities between $500,000 to $1 million.
According to Business Insider, the company plans to continue operations while restructuring its debt.
Cuppa Austin Coffee’s parent company, Best Cuppa Austin, Inc., filed for bankruptcy in the Western District Court of Texas in October. According to an outline by bankruptcy tracking firm RK Consultants, Best Cuppa Austin, Inc. reported assets between $50,000 to $100,000 and liabilities between $500,000 to $1 million. Court documents citing numerous loans and business agreements indicate that the coffee shop, operating for a decade, fell into “financial distress” before filing for bankruptcy.
Some other coffee companies are issuing bankruptcy warnings.
According to the Washington Business Journal, Compass Coffee’s lawyers warned that the chain, with multiple outlets in the Mid-Atlantic region, may be forced to file for bankruptcy due to ongoing commercial disputes with a bakery landlord.
Documents cited in the report show that Compass Coffee allegedly owes the landlord approximately $1 million. The company is currently seeking rent reductions to “adjust operations.” If rent and other protected payments remain at full levels, “Compass Coffee will be forced to vacate the premises or declare bankruptcy,” the lawyer said.
Some lawmakers are urging the Trump administration to reconsider and cancel tariffs on imported coffee beans.
In September, federal representatives Ro Khanna (Democratic Party from California) and Don Bacon (Republican Party from Nebraska) jointly introduced a bill to fully repeal coffee tariffs.
In late October, federal senators Catherine Cortez Masto (Democratic Party from Nevada) and Rand Paul (Republican Party from Kentucky) introduced the “No Coffee Tax Act” in an effort to reduce consumer costs and save the industry.
Paul stated, “Since the U.S. does not produce coffee, taxing coffee will not create any job opportunities, but will only increase costs for families and small businesses.”
Apart from Hawaii and Puerto Rico, there are few regions within the U.S. suitable for coffee cultivation. According to the National Coffee Association, 99% of coffee consumed in the U.S. is imported.
(This article draws from reports by Newsweek)