Michael McCabe operated a hot sauce business from the Brooklyn Pilotworks location that abruptly shuttered over the weekend, and now he doesn’t know when he’ll receive the $2,000 the defunct company owes him.
He’s part of the company’s private distribution operation, and of the 175 vendors kicked out of their working space since the restaurant incubator flopped last Saturday, the ones involved in the distribution program may be facing the largest financial blows. Multiple sources say there are members owed anywhere from $10,000 to $15,000.
McCabe used the startup’s distribution program to get his hot sauce brand called Mabel’s into specialty food stores and local grocers around NYC. The program functioned as a separate arm of the incubator kitchen, in which Pilotworks would purchase members’ goods to sell and distribute them to stores around the city — a way for the small businesses to introduce their brands to a larger audience.
“They were ordering products from us on the distribution side knowing that they wouldn’t be able to pay us, and that’s kind of like rubbing salt in the wound,” McCabe says.
It’s been a shocking week for those involved in Pilotworks, whose abrupt and mysterious closure follows two years of rapid growth. Since opening in 2016, venture capitalists and even the city have invested millions in the start-up. NYC’s Economic Development Corp backed it, and the Office of the Brooklyn Borough President even invested $1.3 million in the build-out of the facility, then called Brooklyn FoodWorks. As recently as December, the company secured $13 million in funding. The EDC said in a statement that the news “was as surprising as it is alarming.”
But other than an email sent to members that stated the company didn’t have the “necessary capital to continue operations” and a brief note on its website, Pilotworks has remained silent. When reached by Eater, the company only sent the same statement on its site.
“No one’s heard from any of the management. Not even a single word,” says David Roa, co-founder of Superlost Coffee. “It’s just mind blowing to me.”
Anjali Bhargava, founder and CEO of Bija Bhar, an organic turmeric elixir maker, doesn’t have high hopes for the payment she’s supposed to receive this week, especially since she’s already missing one from February. In the meantime, Bhargava was planning to visit the Queens warehouse where Pilotworks kept the goods with hopes of retrieving any unsold products. In total, she’s owed about $2,400, which is on the “low range” compared to others, she says.
“The gap that comes naturally with distribution stopping so quickly will really affect our sales and our future,” says Pooja Bavishi, founder and CEO of Malai Ice Cream, which also operated from the Brooklyn kitchen.
Many members had also already paid rent for the month, including Bhargava — another chunk of money members are demanding back. Rent costs varied based on the package, but hourly rates for Bhargava were $32 during the day or $16 after 8 p.m. A typical member could spend $300 a month or $3,000, depending on usage of the incubator, according to Nick Shippers of Ube Kitchen, another vendor.
While Sebastian Jaramillo, co-founder of Mi Casa Foods, wasn’t involved in the distribution operation, he has already been forced to cancel $5,000 worth of orders from his Latin American-focused restaurant.
“It’s a significant hit for a small business,” Jaramillo says, adding that Mi Casa was fully dependent on the incubator for both its short- and long-term plans, including opening a brick and mortar location. That plan is now up in the air.
Members described a chaotic and bizarre scene that Saturday evening, when the Brooklyn space officially closed. Shippers had just wrapped up a shift at Williamsburg’s outdoor food market Smorgasburg when he heard the news. As his team arrived to the building, a locksmith was on site and Pilotworks members, some of which were in the middle of cooking meals, were being told to leave. He says supplies were strewn about and chicken was left on the grill.
If any good has come of the mysterious closure, it’s that its bound the small businesses together. The 100-plus members took action immediately: They formed a coalition, sent out a news release, and met with city officials. On Sunday, Shippers and others began visiting alternative incubators around the city.
Some members are brainstorming ideas to take over the space themselves, and they’ve already reached out to potential investors, according to McCabe. He says most are waiting for the company to file for bankruptcy to decide what their next move will be.
Most are still in shock by the company’s demise, with members telling Eater they had no idea this was coming.
Pilotworks was celebrated when it opened in Brooklyn in 2016. It changed owners and its name at some point, and in 2017, the incubator — which garnered high-profile investors like the founders of Sweetgreen and Blue Hill co-owner David Barber — landed a $13 million investment led by Campbell Soup’s venture capital fund, Acre Venture Partners.
The start-up expanded quickly to markets beyond Brooklyn, including Newark, Dallas, Chicago, Providence, and Portland, Maine, all of which no longer exist. The company also planned to open a brick and mortar spot in Manhattan earlier this year, which never happened.
Several organizations have since stepped up to support affected members, including Hot Bread Kitchen, which announced Monday it was connecting vendors to available kitchens around the city, including its incubator in East Harlem. Milk Money Kitchens is also helping meet the immediate needs of displaced vendors, and founder Nancy Preston has offered her legal team at Helbraun & Levy for help.
The EDC is recommending that members contact them at firstname.lastname@example.org if they need storage space, according to a statement. And today the building’s landlord, Acumen Capital Partners LLC, announced it will let members temporarily occupy the refrigeration, freezer, and storage space as of Wednesday, free of charge.