Founders Brewing Co., the US brewer owned by Spain’s Mahou San Miguel, has closed its taproom in Detroit hours after a former employee filed a racial discrimination complaint against the company.
The brewery, which opened its Detroit outpost in 2017, insisted the decision had been made on the back of poor sales post-Covid-19.
“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 statement on Monday (1 May). “We explored every possible avenue to course correct the business and gave it as much time as we could.
“We are now working diligently to find new positions within the company for the employees who are displaced upon this closure.”
The announcement, however, came on the same day Founders was the recipient of a racial discrimination complaint in Detroit’s U.S. District Court Eastern District. The complaint was filed on behalf of a former taproom manager at Founders’ Detroit venue.
Jack Schulz, a Michigan attorney acting on behalf of complainant Naeemah Dillard, said it was “difficult… to objectively accept” the brewery’s justification for closing the site, in light of his client’s accusations.
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Dillard, who worked at the Detroit taproom from June 2021 until April 2023, has alleged instances of racial discrimination including co-workers intentionally mispronouncing her name and someone telling her that she has “not struggled enough to be black”.
Dillard also claims a general manager at Founders warned her to be careful her six-year-old child did not “steal money” while in the establishment.
She said eventually the treatment left her with no choice but to resign from what Shultz called “a hopeless racist work environment”.
In a statement, Shultz said: “It is difficult for me to objectively accept that Founders’ abrupt announcement to permanently close the Detroit Tap Room mere hours after the Dilliard’s complaint was filed as being due to Covid-19.”
After expressing his sympathy for the 38 Founders employees impacted by the closure, Shultz added: “Ms. Dillard was subjected to a racially hostile work environment which ranged from a manager intentionally mispronouncing her name, to being told she ‘has not struggled enough to be black’, to the general manager warning her to be careful that Ms. Dillard’s six-year-old child didn’t ‘steal money’ while in the establishment.
“Ms. Dillard’s treatment was objectively horrendous. Even worse, when she reported it to management her hours were slashed in half or the complaints were completely dismissed.”
This is not the first time Founders had faced accusations of racism at its Detroit location. In 2019, the Grand Rapids-based brewery temporarily closed the taproom after an employee filed a discrimination complaint alleging “racist internal corporate culture” at the company.
That case was settled later in 2019 for an undisclosed sum, with Founders pledging to donate 100% of profits from the taproom to charities and community organisations, as well as to hire a director of diversity, equity and inclusion.
In a statement to Just Drinks on Tuesday (2 May), Founders said it was “deeply saddened and concerned” by the accusations, adding it was conducting its own investigation.
The Kentucky Breakfast Stout brewer insisted, however, that it was unaware of the pending lawsuit when it announced the taproom closure.
The statement said: “Closing a business is a difficult decision, and this decision was made after a several year evaluation of the Detroit taproom’s financial performance that began prior to Covid and was made worse by the pandemic.
“During the closure of our Detroit facility on Monday, we were unaware of the filing. We announced the closing to all of our Detroit staff on Monday morning, and did not learn about the lawsuit filed against Founders until that evening when a reporter contacted us.
“As with any closure, there was a lot of work that needed to be done to prepare for the loss of this extension, including redistribution of internal assets, conversations with our landlord and pulling together a comprehensive severance plan, all of which take time.
“As to the pending lawsuit, we are sorry that this individual did not have a good experience with us, and to the extent it was due to our actions or inactions that contributed to that, we are deeply sorry.”
Founders was founded in 1997 and initially sold a 30% stake to Mahou San Miguel in 2014, before later ceding majority-control to the Spanish beer company in 2019. In 2023, the brewery was folded into the ‘Mahou USA’ umbrella of brands, which also includes Avery Brewing Co. in Colorado and Mahou Imports.
Together, Mahou USA represents the 13th largest brewery in the US by 2022 brewing volumes.
At the time of publication, neither Mahou San Miguel nor Founders had responded to Just Drinks’ requests for comment.