Despite rising costs and economic pressures, coffee remains an affordable luxury that many consumers refuse to give up. While coffee shops continue to benefit from this strong demand, the realities of running a business, such as high expenses, legal challenges, and market volatility, are unavoidable.

Just as a Black-owned café chain was expanding, building a community, and supporting minority entrepreneurs, the costs of multiple controversial lawsuits and today’s difficult business landscape caught up with it, ultimately resulting in the loss of its most prominent location.

Red Bay Coffee confirmed it will close its Fruitvale headquarters in Oakland, California, at the end of November 2025, just five years after opening the three-story flagship.

“As our lease comes to an end, we’ll be focusing our energy on other parts of our business — continuing to roast, ship, and serve you through our other locations and partnerships,” wrote Red Bay Coffee in an Instagram post.

Founded in 2014 by Keba Konte, Red Bay Coffee café chain and coffee roasting company prides itself on artisanal products and direct trade practices. The company currently operates seven locations: three in San Francisco, one in Berkeley, and three in Oakland, including its flagship and a coffee roastery that doesn’t serve as a café.

Red Bay Coffee invites customers to visit the Fruitvale headquarters during its final days and encourages them to explore its nearby locations, including what will soon be its only Oakland café at 3206 Grand Ave.

Red Bay Coffee is closing its Fruitvale headquarters in Oakland, California.

Shutterstock

Red Bay Coffee files for Chapter 11 bankruptcy

Although Red Bay Coffee cites lease expiration as the reason for the closure, it has faced financial challenges for several years.

On August 29, 2024, the company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Northern District of California, reporting $250,000 in assets and $3.3 million in liabilities, along with a net loss of over $850,000 from January to July 2024.

Red Bay Coffee attributes its financial difficulties to the long-term effects of the Covid pandemic and the high costs associated with a 2018 sexual harassment lawsuit and subsequent breach of contract litigation, according to the filing.

The coffee industry sees growth

Despite Red Bay Coffee’s struggles, the coffee industry continues to grow. Coffee chains saw a 1.4% increase in foot traffic during the third quarter of 2025, even as overall quick-service restaurant visits declined by 2.7%, according to Placer.ai.

“The quick-service restaurant category has seen mixed results this past quarter, as softer consumer spending continues to pressure much of the sector. Yet the coffee subcategory continues to thrive, with much of its success coming from smaller brands,” said Former Chef and Placer.ai writer Bracha Arnold.

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  • Starbucks rival adding breakfast to menus nationwide
  • Popular local bakery chain closing all stores next month
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While giants like Starbucks (SBUX) and Dunkin’ experienced persistent declines in visits, down 1.7% and 0.7%, respectively, they remained largely stable compared to last year.

However, smaller coffee chains played a significant role in driving much of the category’s growth. Brands such as 7 Brew Coffee, Better Buzz Coffee, and Foxtail Coffee Company posted year-over-year visit gains ranging from 46.8% to 80.4%, highlighting the momentum of emerging regional players. 

Small-business challenges persist

Even as the coffee sector grows, small-business closures remain a persistent issue. Independent operators face rising costs for food, labor, and rent, as well as reduced foot traffic and consumer spending.

The U.S. Bureau of Labor Statistics reports that about 17% of new restaurants close within their first year, and nearly half fail within five years.

“Small businesses may find it difficult to operate during challenging economic conditions. Exit rates typically decrease with firm age and cash liquidity, which can help businesses withstand downturns. Historically, the median life expectancy for small businesses has hovered around five years,” according to JPMorganChase analysts.

Independent restaurants have been opening faster than chains since the pandemic, but also account for most closures. According to Restaurant Data, 13,265 independent establishments shut down in the first half of 2024, compared to 2,712 chain locations.

“A business owner has greater potential to mismanage certain aspects of the business without a dedicated management team, whether it be finances, hiring, or marketing,” per Investopedia.

More coffee chains that have closed locations

  • Starbucks: Revealed plans to reduce its North American footprint by about 1% by the end of fiscal 2025.
    Source: The Street
  • Foxtrot: Filed for Chapter 7 bankruptcy under its former parent company, Outfox, in late 2023 and closed all locations before reopening nine cafés under the Foxtrot brand.
    Source: The Street
  • Philz Coffee: Closed its San Francisco headquarters in 2024 and was acquired by a private equity firm in 2025.
    Source: USA Today

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