Founders Brewing Company has permanently closed its satellite taproom in Detroit, six years after announcing plans to open it.
“This decision involved a lot of careful consideration of each aspect of our business, and ultimately, what we felt was best for the company and our employees overall,” Founders CEO Elton Andres Knight said in a press release. “We explored every possible avenue to course correct the business and gave it as much time as we could.”
The Detroit taproom employed 38 workers, for whom Founders is “now working diligently to find new positions within the company,” Knight added. The taproom at Founders’ headquarters in Grand Rapids, Michigan, will remain open.
The Detroit taproom was Founders’ first outside its hometown of Grand Rapids. At the time of its announcement, the 14,000 sq. ft. facility was estimated to cost $4 million to build.
“Unfortunately, our Detroit location has not been immune to the struggle to retain foot traffic after temporary COVID closures that have impacted restaurants and bars across the nation,” the Mahou San Miguel-owned brewery wrote in an Instagram post.
At the height of pandemic-driven closures in May 2020, Founders – like many other craft breweries and on-premise establishments – furloughed its 163 hospitality employees, nearly two months after having closed both taprooms on March 13, 2020.
Months before the pandemic began, Founders temporarily closed the Detroit taproom after the location became the setting for a racial discrimination lawsuit filed by Tracy Evans, a Black former employee who said several coworkers used racial slurs in his presence and that the brewery tolerated a “racist internal corporate culture.”
Testimony from a deposition in the lawsuit leaked in October 2019 and revealed that the Detroit taproom’s former general manager declined to acknowledge Evans’ race and that of other prominent Black men, such as Barack Obama. This drew backlash in the community. During the closure, Founders said it planned to pay all taproom employees, “including those who have said via social media that they plan to protest.”
Evans and Founders settled for an undisclosed amount in October 2019.
Year-to-date through March 26, off-premise dollar sales of the Mahou USA family – which includes Founders, Avery and Mahou Imports – declined -10.2%, to $22.1 million, while volume, measured in case sales, declined -14.6%, compared to the same period last year, according to market research firm Circana.
In the same period, dollar sales of Founders All Day IPA declined -9.2%, to $12.4 million, while volume declined -14.1%, compared to 2022, according to Circana.
In 2022, Mahou USA ranked as the 13th largest overall domestic brewing company by volume, according to the Brewers Association (BA). In 2021, Founders’ output declined -9%, to 540,000 barrels of beer, according to BA data.