The Black Sheep brewery may have been saved from closure but the Masham-based company has been forced to axe three pubs as it rebuilds the business.

The brewery survived the Covid pandemic and lockdowns but was hit by what chief executive Charlene Lyons calls “a perfect storm” of rising costs. She added the brewery’s performance during Christmas 2022 and in January and February of this year was below expectation.

“We had too much debt as a result of loans,” she added. “Cash was draining away.”

The company went into administration in May. Lyons said: “We underwent a review process with a specialist advisory company, Teneo, and through them we were contacted by the Breal Group.”

Breal is a London-based investment company and is rumoured to have bought Black Sheep for £5m with a further £10,000 for the brewery’s retail arm. Black Sheep will not confirm these figures.

The brewery was founded in 1992 by Paul Theakston when he left the eponymous family firm to launch his own business. Black Sheep became popular for beers like Best Bitter, Special Ale and Riggwelter. In 2000 it bought the York brewery and its pubs. York’s main beer, Guzzler, is now brewed at Masham.

The three pubs closed are the Last Drop Inn, York plus the Tap & Kitchen and Mr Foley’s in Leeds. The company said that “after an extensive review, we explored every angle to keep these locations trading profitably but without success”. Two pubs remain, including the visitor centre alongside the brewery.

Lyons said more than 100 jobs have been saved following the sale to Breal, but there have been some redundancies in the retail company as well as staff at the three pubs.

She remains as chief executive along with Paul Theakston’s sons Rob and Jo, who are in charge of sales and marketing. Paul has retired but has an ambassadorial role.

Lyons added the brewery had been under-capitalised and Breal will now invest to allow production to grow. The brewery plans to expand its sales area into London and the South. New beers will be added and two existing brands, Respire IPA and Milk Stout, have been launched in keg form. Respire is also a cask ale and a new blond beer is planned.

The Last Drop Inn in Colliegate, York opened in 2000 and was run by York brewery. In May this year it was named Pub of the Season by its CAMRA branch. Alex Higginson, who ran the pub, said he was “beyond upset by the closure. With our customers, we turned it into a real community local”.

CAMRA's Yorkshire regional director Kevin Keaveny said: “The Last Drop Inn was a revelation when York brewery opened it in 2000. As all three pubs are in good trading areas maybe a new operator can be found for them.

"We hope Black Sheep can survive. Covid and lockdowns hit it hard and, as with all breweries, received little support from the government. Many hospitality businesses are on knife-edge margins and one bad trading week can push them over the edge."