Shutdown takes place less than a month after investment group’s purchase of the bakery
by Randolph T. Holhut/The Commons Vermont Bread Company in Brattleboro and Koffee Kup Bakery in Burlington abruptly shut their doors on April 26 and laid off hundreds of workers in Brattleboro and Burlington.
According to the Vermont Department of Labor, 156 workers lost their jobs at Koffee Kup’s Riverside Avenue bakery on Riverside Avenue in Burlington and 91 workers lost their jobs at Vermont Bread’s bakery on Cotton Mill Hill in Brattleboro.
Employees did not have advance warning. Workers who showed up on April 26 were greeted with a closure notice on the door.
However, on April 1, a majority of the shares in Koffee Kup were purchased by New York City–based American Industrial Acquisition Corporation (AIAC), an investment firm.
According to a news release from AIAC Senior Advisor Jeff Sands, “For each of the last four years, Koffee Kup has suffered substantial financial losses and was unable to find a way out of their troubles.”
Sands wrote that Koffee Kup was in default to several of its lenders, but that the lenders allowed the company to keep operating under a forbearance agreement.
“Employees, lenders, suppliers and customers all went above and beyond to support Koffee Kup during that time,” wrote Sands. “In the last six months, the company was unable to find a new investor/operator who was willing to commit the resources necessary to bring the company back to health.”
By last week, Sands wrote, Koffee Kup had received default notices from lenders that would no longer extend credit to cover operating expenses.
“Although many promising avenues were explored that we were cautiously optimistic would have allowed Koffee Kup to survive, those efforts have now been exhausted without success and Koffee Kup no longer has sufficient capital to continue operations,” Sands wrote.
Within two days of the closure, Vermont Department of Labor Commissioner Michael Harrington issued this statement:
“On Monday April 26, 2021, the Vermont Department of Labor received formal notification from Koffee Kup Bakery (KKB), in the form of a Notice of Potential Layoff (also referred to as a WARN Notice), that the company was ceasing operations at its Burlington and Brattleboro facilities effective immediately. In an effort to immediately support the roughly 250 Vermonters who have lost their jobs, our Workforce Development and Unemployment Insurance divisions have begun the process of coordinating Rapid Response services. Additionally, a number of employers across the state have contacted the Department of Labor interested in hiring individuals who were impacted by this closure."
VBM reported the acquisition of Vermont Bread by Koffee Kup in January 2013: "VEDA approved $683,165 in Subchapter 5 financing to help Koffee Kup Bakery acquire the Vermont Bread Company and its East Coast affiliate company from Boulder, Colorado-based Charter Baking Company.
“Koffee Kup Bakery has been a significant regional bakery operating in Burlington since the 1940s and now employs 148 people. The company produces, sells and delivers donuts and bread products throughout Vermont and New Hampshire, and parts of New York, Maine and Massachusetts.
"The Vermont Bread acquisition includes significant bakery facilities and equipment in Brattleboro, Vermont and northeastern Connecticut. The acquisition will enable Koffee Kup to further expand operations, and save a considerable number of well-paying jobs in southern Vermont.
"Peoples United Bank also provided financing for the project. In conjunction with the Vermont Bread Acquisition Project, VEDA also approved $180,000, and Peoples United Bank provided additional financing, to help Koffee Kup Bakery acquire $450,000 of bakery and distribution machinery and equipment."
KKB employees who were impacted by the closure can contact the Department of Labor’s Workforce Development division directly at https://labor.vermont.gov/Jobs, or by calling (802) 863-7676 for individuals in the Burlington-area, or at (802) 254-4555 for individuals in the Brattleboro-area.
Vermont’s Notice of Potential Layoff Act requires that employers notify the state 45-days prior to closure, and municipalities and affected employees 30-days prior to closure, neither of which happened in this case.
In specific instances, employers may qualify for an exemption to the prior notice clause.
Harrington said the Department of Labor’s legal team is reviewing the notices that were provided and have already been in contact with the KKB to determine whether the company complied with the provisions of the Act.
All Notices of Potential Layoffs are available on the Department of Labor website at: https://labor.vermont.gov/warn-act-and-notice-potential-layoffs-act.”
At his April 27 press conference, Governor Scott called the closings “very unfortunate. I knew that there was some financial issues over the last year or so but it took me by surprise that they shut down so quickly yesterday.”
Scott said he had only heard suggestions that there were financial issues, but did not have specific information, nor did he realize anything was imminent. Scott said if the state had known sooner, then it possibly could have helped mitigate the situation in some way.
“(Koffee Kup is) a bit of an iconic brand for us here in Vermont. I’m hopeful that maybe someone else could make a viable concern out of it. We'll see what happens. But in the meantime, we want to make sure that we're protecting all the employees. As we've heard a lot, there are many different job openings throughout the state. So we'll do our best to connect those employees with some viable alternatives.”
Commerce Secretary Lindsay Kurrle added that along with providing Rapid Response re-employment resources for the terminated workers, the state would do what it could to find a new owner.
Started in a barn
Vermont Bread Company started in Guilford in 1978 with a pizza oven inside an 800-square-foot barn on a dirt road. Under the leadership of Lisa Lorimer, it grew into the largest baker of all-natural and organic breads in the Northeast.
Its bakery on Cotton Mill Hill had about 200 full- and part-time employees as of 2005, when Vermont Bread was sold to Charterhouse Group, a New York–based equity firm that merged it with Rudi’s Organic Bakery of Colorado and the Adams Baking Corporation of New Jersey to create Charter Baking, the nation’s largest organic and all-natural baking company.
There were few changes in the Brattleboro operation after the Charterhouse purchase, but Vermont Bread was sold again in 2013 to the Burlington-based Koffee Kup.
Vermont Bread and Koffee Kup, at the time the two largest commercial bakers in Vermont, seemed to be a good fit.
Founded in 1940, Koffee Kup was a longtime distributor of Vermont Bread’s products in upstate New York and northern New England. Their product lines did not overlap, as Koffee Kup is best known for its doughnuts, crullers, English muffins, and hot dog and hamburger rolls.
Together, Koffee Kup and Vermont Bread’s products reached more than 4,500 delivery points from Maine to Maryland. The company also baked “private label” breads for grocers in the Northeast.
Resources for employees
On his Facebook page, Brattleboro Selectboard member Tim Wessel wrote that “Brattleboro has been blindsided by this abrupt closure at VBC, and this callous move does seem to be driven by outside investors.”
He said the town is “looking into ways we or other agencies can assist.”
A representative of the United Way of Windham County weighed in on a discussion on the public Brattleboro, Vermont Facebook group on Tuesday.
“For those who are waking up this morning feeling despair or unsure of what to do next, remember you can call 211 for resources,” wrote Brandie Starr, outreach and marketing associate for the social services nonprofit.
“Call unemployment when you have the time to just leave the phone next to you on speaker, because the wait will be long,” she advised. “Call 211 for help locating food in your community, and other resources, including talk in a time of crisis.”
Starr, who recently stepped down from the Selectboard, said the abrupt closing “feels unfair and undeserved.”
“Regardless of what business decisions were made, the lack of communication to employees was/is deplorable and dehumanizing,” she wrote.
The Commons is a weekly newspaper based in Brattleboro. Additional reporting by Jeff Potter and Timothy McQuiston.