Mr. Holmes Bakehouse files for bankruptcy

(Matic Zorman / Getty Images)

(SAN FRANCISCO) The popular San Francisco bakery Mr. Holmes Bakehouse, known for its Instagramable pastries like the cruffin, has filed Chapter 7 bankruptcy and its former CEO resigned.

The bakery went dark last summer after a brief reopening but now all operations, including the Larkin Street location and the Los Angeles location, have shut down, per reporting by the San Francisco Chronicle.

The bakery initially opened in San Francisco in 2014 to much acclaim. The company expanded operations to Los Angeles and eventually set up locations across the globe, like Kuwait, South Korea and more recently Singapore.

Former CEO Aaron Caddel, who left after an acquisition deal fell through, said the company filed for Chapter 7 earlier this year. The Chronicle confirmed that the viral bakery filed in February of this year, a strange turn of events for a company that enjoyed much success in the Bay Area and recently began expanding to the global market.

Caddel said that a coffee company, which he would not name, acquired Mr. Holmes Bakehouse at the end of 2019, in an attempt to merge the two and launch a craft coffee and pastry business. As part of the acquisition, Caddel put all of his assets into a new company.

This comes as a sharp turnaround as just six months ago Caddel and Mr. Holmes hailed themselves as a solution to the "national problem" of increasing minnimum wage. The Golden State's minimum wage went up to $13 an hour in 2020 and bakeries like Mr. Holmes looked for a way to keep their hefty profits. The bakery developed a different wage scale that is tethered to employee's quantifiable performance.

Caddel pointed to the wage model Mr. Holmes developed as a driving force behind the 18 international franchises, amounting to $20 in 2019. Caddel's decision to move towards franchise deals rather than locations across California is in part because of what he noted as rising labor costs.

It's unclear exactly what drove Caddel to leave and the Chapter 7 filing but subsequent lawsuits following the failed acquisition deal may have played a role.

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