Bankrupt HopCat Parent Bought for $17.5 Million

BarFly Ventures, parent of HopCat, Stella’s Lounge, and Grand Rapids Brewing Company, has emerged from bankruptcy, selling for $17.5 million to private investment firms Congruent Investment Partners and Main Street Capital.

Congruent and Main Street, previously lenders to the company, will operate 11 units under the name Project BarFly LLC.

“We know the business extremely well from our experiences over the last five years,” Travis Baldwin, founder of Congruent, said in a statement. “We strongly believe in each restaurant concept and intend to return the company’s focus to providing a unique, best-in-class customer experience. Our goal is to focus efforts around the company’s key markets and ensure HopCat, Stella’s, and Grand Rapids Brewing Company remain a thriving part of these communities.”

When BarFly filed for bankruptcy in June, founder Mark Sellers attributed the company’s decline to an increase in competition and saturation of the craft beer market. He said BarFly was meeting those challenges until the COVID pandemic arrived. State and local restrictions forced a 100 percent drop in revenue for three months. He told the Michigan House of Representatives Regulatory Reform Committee at the time that his company was evicted from one HopCat location and was in default at other stores. The company entered court proceedings with more than $30 million in debt.

According to MLive, HopCat attempted takeout, but the switch to off-premises wasn’t breaking even. Baldwin said BarFly is renewing efforts to focus on off-premises sales and restoring hours of operations across each of the 11 locations.

“Over the last several months, the home office support team, general managers, and restaurant team members have worked hard to reopen the restaurants and stabilize the company,” said Ned Lidvall, CEO of Project BarFly. “The company has continued to improve operating results in a difficult environment by focusing on keeping our team and guests safe, improving our off-premise sales, and reconstructing our business as the marketplace expands and allows. The whole management team and I are very excited about the new owners. We think it’s a great fit for the company, and the energy and collaboration they bring will only enhance our recovery and growth. We are also thankful for our loyal guests and teammates—and vendor and landlord partners who have been working hard to make our progress possible.”

BarFly was founded 12 years ago when HopCat first opened in Grand Rapids, Michigan. The chain’s expansion was financed by debt instead of cash to accelerate growth. However, underperforming locations shuttered and the COVID crisis worsened the trend.

However, the new owners said BarFly is preparing for a turnaround.

“HopCat, Stella’s and Grand Rapids Brewing Company are important to both Grand Rapids and the state of Michigan,” said Nick Meserve, managing director of Main Street, in a statement. “We intend for these restaurants to succeed and very much believe the company can return to growth as the pandemic subsides. This is much-needed good news for the local community and restaurant industry as a whole.”