In April, the Crazy Mocha coffee chain announced a special blend of java that it would sell to provide donations for Pittsburgh-area nonprofit organizations responding to the COVID-19 pandemic.
The company, meanwhile, has been dealing with its own financial difficulties.
Ed’s Beans Inc., the parent company of Cranberry-based Crazy Mocha and Kiva Han Coffee, filed for Chapter 11 bankruptcy reorganization this week, claiming it owes more than $4.75 million to more than 50 creditors.
Total assets owned by the company fall in the $100,000 to $500,00 range, according to the court filing.
The petition, filed Monday in the U.S. Bankruptcy Court for the Western District of Pennsylvania, indicates that the company’s biggest creditor, First Commonwealth Bank, is owed $2.4 million. The founder of Crazy Mocha, Ken Zeff, who sold the company two years ago to Ed’s Beans, is owed $685,000.
Crazy Mocha will continue serving customers during its bankruptcy reorganization, according to a statement by the company.
“The good news is that we’ll still be serving our loyal customers at seven locations, and plan to reopen more locations in the coming months,” said owner Ed Wethli. “In these uncertain times, customers can take comfort in the fact they can still enjoy their hometown coffee as they have for 20 years.”
The seven stores open are located in Sewickley; Heritage Valley-Sewickley; Heritage Valley-Beaver; UPMC East; North Side; Oakland; and Squirrel Hill. In addition, Mr. Wethli said Crazy Mocha’s coffee blends are available online at the company’s website.
The bankruptcy filing will have no impact on the Kiva Han wholesale coffee business, which Ed’s Beans also owns and operates.
Mr. Zeff started the company in 2000 and sold the chain in March 2018 to Mr. Wethli.
For years, the Pittsburgh-born coffee chain held its own against national brands like Starbucks as well as other independent coffee shops in the competitive Downtown market and into the suburbs.
COVID-19, however, wreaked havoc on coffee shops across the country due to social distancing limitations and rules that were put in place to protect staff and customers from infection.
But the bankruptcy filing indicates Crazy Mocha’s parent company was most likely bleeding red for some time before the COVID-19 outbreak.
That didn’t stop Ed’s Beans from launching a new flavor called The Emergency Blend in April to raise money for nonprofit organizations make ends meet as the COVID-19 shutdowns took a toll.
The Emergency Blend donated 10% of all sales to The Pittsburgh Foundation’s COVID-19 emergency fund, which helps nonprofits that assist people with housing, food and medicine.
As it stands, the company owes more than $200,000 in back rent at various store locations, in addition to owing $25,000 to Duquesne Light Company and $60,000 to vendors, according to its court filing.
The filing lists nearly $160,000 in debt to three credit card companies and more than $330,000 to three different merchant advance lenders, which are high-interest loans used by small businesses as a last resort when traditional bank financing isn’t available.
From a single shop on Ellsworth Avenue in Shadyside, the chain grew to a high point of 24 locations in February.
“Foot traffic is the lifeblood of our business,” Mr. Wethli said. “The pandemic, however, has disrupted the daily routines we all enjoy, especially in the workplaces where so many of our stores are located. As a result, the financial strain caused us to file a plan of reorganization, which will allow us to continue serving great coffee and emerge from this downturn even better than before.”
Tim Grant: tgrant@pos-gazette.com or 412-263-1591
This story was updated at 1:15 p.m. on Oct. 22.
First Published: October 21, 2020, 6:27 p.m.
