Struggling Cocolat Closes Next-to-Last S.F. Store

Source: San Francisco Chronicle
Date: April 6, 1993

by Gavin Power

Cocolat Inc., the Hayward-based confection company that is struggling to avoid bankruptcy, yesterday shut one of its two San Francisco stores.

The closing of the downtown store at 275 Battery Street follows the recent closing of four other outlets - two in San Francisco, and one each in Orinda and Los Altos. The gourmet chocolate maker, which has been plagued by losses and faces possible eviction from its Hayward headquarters and factory, now operates nine stores in the Bay Area.

Attorneys for Cocolat, founded in Berkeley in 1976, recently informed creditors that the company had suspended payments on old debts and is reorganizing its operations. They said that if a debt repayment plan expected later this month is not approved by creditors, Cocolat may be forced to file Chapter 11.

News of the debt moratorium prompted owners of Cocolat's headquarters to file suit last month seeking to terminate its lease and recover unpaid rent.

In addition to its financial woes, Cocolat has been under attack for its management practices. In recent months a number of high-level managers and employees reportedly quit, claiming that they suffered "religious" harassment because their bosses used management techniques based on the teachings of L. Ron Hubbard, the founder of the Church of Scientology.

Cocolat is owned by Feshbach Brothers Inc., a Palo Alto-based investment firm that acquired the company in 1990 after an employee embezzled $500,000, forcing the founder - Alice Medrich - to sell her interest.

Cocolat also has been hurt by the recession and losses incurred after an arson fire destroyed its Berkeley headquarters in 1991. Damages were estimated at $2 million.

Jay Andalis, a manager at Cocolat, said that the Battery Street store occupied 1,000 square feet and employed six people. He would not say whether additional store closings are planned. Cocolat principal Joe Feshbach declined to comment.