Popular Italian restaurant chain files for Chapter 11 bankruptcy
According to The Street, The fast-casual restaurant segment has faced significant challenges since the COVID-19 pandemic. While some restaurants adapted to delivery, takeout, and drive-thru models, many struggled financially due to the closure of dining rooms and the lasting effects of the pandemic.
Pandemic Fallout Leads to Bankruptcy Filings
Although some restaurant chains survived the initial impact of the pandemic, financial distress continued, forcing many to file for bankruptcy. Red Lobster is among the most notable, filing for Chapter 11 on May 19, leading to the permanent closure of 93 restaurants.
Rubio’s Coastal Grill also struggled, partly attributing its financial woes to California’s AB 1228 law, which raised the minimum wage for fast-food workers at large chains to $20 an hour. The Mexican fast-casual chain filed for Chapter 11 bankruptcy on June 5, closing 48 locations in California. Before the filing, Rubio’s had 134 locations across California, Arizona, and Nevada.
Italian Restaurant Chains Hit Hard
Italian restaurant chains have been particularly vulnerable. FoodFirst Global, the parent company of Brio Tuscan Grill and Bravo Cucina Italiana, filed for Chapter 11 in April 2020, struggling both before and after the pandemic. Two months later, Earl Enterprises acquired the brands out of bankruptcy.
Johnny Carino’s Italian restaurant chain also experienced financial difficulties, filing for Chapter 11 bankruptcy twice, once in 2014 and again in 2016. Sbarro, the well-known Italian fast-food chain with over 700 locations, filed for Chapter 11 in 2014, having faced high food, labor, and lease costs. It had previously filed in 2011.
Buca di Beppo Files for Chapter 11 Bankruptcy
The latest restaurant chain to file for bankruptcy is Buca di Beppo. On August 4, the popular Italian eatery filed for Chapter 11 protection, seeking to reorganize with the support of its lenders. The company’s largest equity holder, Buca Investments, and nine affiliates submitted the filing in the U.S. Bankruptcy Court for the Northern District of Texas, listing $10 million to $50 million in liabilities.
Court documents revealed that Buca di Beppo’s financial troubles stem from declining sales, rising food and labor costs, and shifting customer preferences. In response, the chain closed 13 underperforming locations, including restaurants in Sacramento and Salt Lake City, but still operates 44 core locations in 14 states, along with two international locations.
Also read: BIG UPDATE: After Chapter 11 bankruptcy closures, retail stores find new life
A Path to Reorganization
“This is a strategic step towards a strong future for Buca di Beppo,” said Rich Saultz, president of the company. He emphasized that restructuring would help the brand reinvigorate itself despite the industry’s challenges. With the backing of its lenders, Buca di Beppo aims to secure a more stable future.
The chain, which was founded in Minneapolis in 1993, grew to as many as 95 locations by 2013 before it began closing stores. In 2008, it was purchased by Robert Earl’s Planet Hollywood International, and it is currently owned by Earl Enterprises.
