A combination of economic issues rocked the coffee industry over the last year, causing financial distress for coffeehouses and roasters and forcing several to close up shop and, in some cases, file for bankruptcy.
Rising coffee bean commodity prices, increased labor and product costs driven by inflation, higher interest rates on debt, and consumer caution about buying quick-service food and drinks have all impacted the industry.
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The global benchmark price of arabica coffee beans doubled from January 2024 to January 2025, with prices skyrocketing by 25% in the first month of the year.
Related: Starbucks rival coffee chain closes struggling location
The price of a pound of arabica coffee beans was more than $4 a pound in January for the first time, CNBC reported in February. The price increase was fueled by climate-change weather patterns that disrupted agricultural production worldwide.
Coffee chains that have closed locations have included the king of coffeehouses, Starbucks, which has about 17,000 locations and shuttered about a dozen in 2025 so far. Small chains have also shut locations, such as San Francisco-based boutique coffeehouse Ritual Coffee Roasters, which closed one of its five locations.
Another coffee chain, Corner Bakery Café, which operated 175 locations at one time, filed for bankruptcy in February 2023 and sold its chain, which had been reduced to 138 units.
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Colorado Springs, Colo., coffee chain Switchback Coffee Roasters on Aug. 19, 2024, filed for Chapter 11 bankruptcy to reorganize its business, but the company did not reveal specific reasons for filing for bankruptcy.
The coffee chain, which has won gold, silver, and bronze awards from the Colorado Springs Independent on several occasions since opening in 2010, operates two cafés and a roastery in Colorado Springs, Colo.
Coffee exporter files for bankruptcy protection.
Image source: Shutterstock
Montesanto Taveras files for bankruptcy protection
One of Brazil’s largest coffee exporters Montesanto Taveras Group, and its affiliates Atlântica Exportação e Importação SA and Cafebras Comércio de Cafés do Brasil SA, filed for bankruptcy protection in the 2nd Business Court of Belo Horizonte in Brazil, blaming rising international coffee prices, coffee bean crop losses, and depreciation of the real against the U.S. dollar for causing its financial distress, Valor International reported.
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U.S.-based Montesanto affiliate Ally Coffee, a green coffee importer, was not included in the bankruptcy filing, according to Daily Coffee News.
Montesanto Taveras sought bankruptcy protection from creditors holding about R$2.13 Brazilian reais ($361 million) in debt. The company, which has a network of 2,000 coffee producers and 177 employees, traded 166,300 tons of coffee with 58 countries in 2023, according to Valor.
Atlantica reported R$1.61 billion in revenue and a loss of R$42.4 million in 2023, while Cafebras had R$999.5 million in revenue and a net profit of R$42.4 million.
Climate change issues impact coffee growers
Montesanto Tavares’s 2021-22 coffee crop suffered from drought, frost, and hail damage to coffee farms in southern Mina Gerais, Brazil. The company was forced to buy coffee on the spot market at higher prices to cover its export commitments after growers failed to deliver the volumes for which the company had contracted.
The company financed the purchases through advance payment contracts, but its economic situation worsened as international arabica coffee prices rose significantly and the real depreciated. Several brokers and banks also issued margin calls to cover rising costs.
Montesanto Tavares obtained a 90-day grace period to negotiate its debt out of court, but it could not reach an agreement. The debtor’s creditors include Cargill, Banco de Brasil, Santander, Safra, Bradesco, BTG Pactual, and Itaú Unibanco.
Related: Another huge auto parts brand files for Chapter 11 bankruptcy
