USA, TX: Buffalo Bayou Brewing Company closes as landlord ends lease

Buffalo Bayou Brewing Company's lease at Sawyer Yards has been terminated, raising the likelihood that the longtime Houston brewery will cease operations permanently, according to reports on January 26.

Jon Deal, owner of Sawyer Yards, served Buffalo Bayou CEO William McLucas with a notice of default on Friday, per Eric Sandler of CultureMap Houston. The brewery and taproom located at 2101 Summer St. then closed, with orange cones blocking the entrance to the parking lot.

McLucas didn't immediately respond when reached out by Chron Friday evening.

Rassul Zarinfar founded Buffalo Bayou Brewing Company in 2011, operating out of 5301 Nolda St. in Rice Military. In December 2017, the brewery announced plans to build a $14 million brewery and taproom in Sawyer Yards and started raising money on the Houston-based investment platform Nextseed eyeing $1 million from interested community members to help fund the project. As 583 investors combined to raise the $1 million, Buffalo Bayou began construction of its three-story brewery and taproom in November 2018.

One year later, the brewery opened its sprawling, 28,000-square-foot complex at Sawyer Yards, which included rooftop downtown views and a full-service food program led by chef Arash Kharat. (In 2022, Kharat left Buffalo Bayou to join Blood Bros. BBQ, with whom he currently works.)

But Buffalo Bayou has had its share of controversies regarding its brewery and taproom.

In April 2022, Nextseed investors of Buffalo Bayou were informed by Republic—a private investment firm that acquired Nextseed in 2020—that the platform sent the brewery a "notice of default," citing breach of payment terms. In short, Buffalo Bayou was unable to pay back investors required percentages of its monthly gross revenue, as per the terms with Nextseed. The brewery told investors in emails that it was unable to pay because of supply chain and distribution issues, as well as its reduced traffic in the wake of the COVID-19 pandemic.

"As collateral agent on your behalf, Republic Investment Services LLC has been working with the Buffbrew Taproom team to find a path to maximize the return of capital to investors," read the April 2022 email from Republic. "We are actively exploring all possibilities to find the most beneficial outcome for investors and will urge the business to provide its own updates."

In September 2022, financial services company Pimuro Capital Partners sued Buffalo Bayou, alleging a nonpayment of roughly $94,000. Buffalo Bayou hired Pimuro to help with reorganization, cash conservation, debt evaluation and equity financing. In the court documents, Buffalo Bayou was characterized as "a failing Houston-based brewing company in dire financial straits." It was around this time that CEO Zarinfar merged with McLucas, also managing director and founder of Houston investment firm WPM Capital Partners.

But that transition, resulting in McLucas being named CEO of Buffalo Bayou, also came with controversy. In September 2023, brewery shareholders sued Buffalo Bayou, alleging that they were not consulted of the merger between Zarinfar and McLucas. The suit further alleged that McLucas leveraged relationships to acquire Buffalo Bayou, and that shareholders were not paid in the merger.

Buffalo Bayou's sudden closure comes during a difficult time for breweries across the Houston area. In June 2023, CounterCommon Beerworks & Kitchen in Bellaire closed after one year of operation. One month later, Black Page Brewing Co. ended a 10-month run in the Near Northside area. Then, earlier this month, Humble's creative Ingenious Brewing shuttered, citing ongoing financial woes.

28 January, 2024