DUBAI – QAHWA WORLD
U.K.-based coffee company Caffè Nero has secured the winning bid to acquire the majority of assets belonging to Washington, D.C.-based Compass Coffee, which filed for Chapter 11 bankruptcy protection last month.
The final bid reached $4.75 million following a competitive, three-day auction involving five prospective buyers. Caffè Nero had initially set the baseline offer at $2.9 million through a “stalking-horse” bid. The transaction remains subject to approval by the bankruptcy court.
Operations to Continue Under Compass Name
For now, the 17 Compass cafés operating across the D.C. area are expected to remain open under their current brand. Whether the Compass name will be retained long term has not yet been determined.
Compass co-founder and CEO Michael Haft stated in an interview with The Washington Post that representatives from Nero will begin meeting with Compass staff as part of the transition process. While Nero has indicated interest in keeping the existing leadership team, formal employment offers have not yet been finalised.
A court hearing is scheduled for February 26, the earliest date on which Nero could formally assume control of the company.
Background on Both Companies
Founded in 1997 by Gerry Ford, Caffè Nero has grown into an international brand with more than 1,000 locations across 11 countries. In the United States, however, its presence remains concentrated primarily in the Boston area, with no current locations in Washington, D.C.
Compass Coffee was established in 2014 by former Marine Corps officers Michael Haft and Harrison Suarez. The company expanded rapidly in its early years, focusing heavily on high-traffic downtown locations. It also invested substantially in a large roasting and production facility in Ivy City, aiming to scale its operations.
Financial Struggles and Bankruptcy
Despite its early growth, Compass struggled to achieve sustained profitability. The pandemic forced temporary closures of several downtown cafés and prompted the company to diversify revenue streams, including selling packaged coffee through grocery stores and direct-to-consumer channels, as well as producing hand sanitiser during the height of demand.
In recent years, additional pressures compounded the company’s financial strain. These included rising coffee costs, wage increases, reduced downtown foot traffic, a shrinking federal workforce, legal disputes with landlords and suppliers, and internal conflict between the founders. Suarez departed the company in 2021, and litigation between the co-founders followed.
By early January, Compass filed for Chapter 11 protection.
The $4.75 million sale will not cover all outstanding obligations. Total debts exceed $12 million, with secured creditors expected to recover approximately $2 million. Unsecured creditors remain owed several million dollars, and investors—including the founders—are not expected to recoup their contributions.
Looking Ahead
In a message to employees, Haft expressed optimism about the transition, suggesting that new ownership could provide stability in a market environment that has shifted significantly since 2020. He noted that downtown business patterns and consumer habits have changed, requiring a different operational approach than in the company’s early years.
If approved, the acquisition will mark the end of Compass Coffee’s 12-year period as an independent, founder-led company and signal Caffè Nero’s entry into the Washington, D.C., market.
