Dive Brief:
- Compass Coffee, a 25-unit cafe chain in the Washington, D.C., metro area, filed for Chapter 11 bankruptcy Monday, according to court records filed by Michael Haft, the brand’s CEO and one of its co-founders.
- Compass owes about $11.7 million to creditors and investors, according to the filings. The brand employs 166 workers across its store footprint.
- The brand faced persistently low foot traffic at many locations even after the end of pandemic-related restrictions. Reductions in the federal workforce and the persistence of remote work in Washington, D.C, were partly to blame, Haft claimed in the filings.
Dive Insight:
Despite persistent traffic troubles, Compass, which was founded in 2014, continued to expand throughout the D.C. metro area in recent years. In May 2024, the chain had 18 cafes operating, and later that year the company took over cafe spaces formerly operated by the Wydown Cafe, a local brand that closed in 2024 after a union drive among its employees. Compass continued to open locations as late as May 2025, according to its website.
Compass also moved into locations that had seen significant turnover in retail tenants. In August 2024, for instance, the chain opened a location in a storefront in the Adams Morgan neighborhood which previously housed a Philz Coffee that closed in 2023, followed by a Foxtrot that folded when the luxury coffee and food retailer shut in 2024.
Haft wrote that some Compass locations remained profitable, but that others were running at a loss or were minimally profitable.
In a note sent to customers on the brand’s email list, Haft said its cafes remain open but “we are refocusing on our strongest locations so we can protect the heart of Compass.”
Compass asked the court for permission to reject 10 leases at the end of January, noting in a filing that those locations “are likely to continue to drive losses for the Debtor, and as a result, should be rejected.”
This could result in significant cafe closures, though Haft wrote that the company “will attempt to determine whether there is a potential suitor for any of those leased locations on existing or potentially modified terms,” which could prevent shut downs.
The chain tried to sell itself before filing for bankruptcy, and has agreed “to sell substantially all of its assets to a strategic buyer with a substantial, global presence in the retail coffee business,” subject to court approval and the Chapter 11 auction process. Haft said the chain would soon file court documents outlining the proposed sale. Compass did not say more about the potential identity of this company.
Prior to the filing, Compass made a series of cuts to overhead to reduce its expenses, including closing its distribution business and selling off some of the equipment and inventory associated with it, Haft wrote.
Compass has occasionally been a controversial player in Washington’s restaurant scene. Last year, co-founder Harrison Suarez sued the brand over his 2021 termination and alleged the company misused pandemic relief funds, according to the Washington Post. Haft disputed Suarez’s allegations. In 2024, the chain faced a union drive at several of its cafes backed by Workers United, and the company’s response — which included mass-hiring — drew legal challenges from the union, and the National Labor Relations board cases remain open.
