Bertucci’s filed for bankruptcy protection on Monday and will put itself up for sale, following years of weakening sales and deteriorating financials that the company blamed on a difficult environment for casual dining chains.
Bertucci’s, said last week to be preparing a filing, is down to just 59 locations after operating 93 just five years ago and 79 last year.
Documents filed with the U.S. Bankruptcy Court in Delaware show the company has more than $110 million in debt to various entities.
Bertucci’s also has a deal to sell itself to a company called Right Lane Dough Acquisition for nearly $20 million. Other companies, however, could step in and offer to pay more for the company in an auction process.
“Today’s filing is expected to be seamless for Bertucci’s guests, trading partners and vendors and result in minimal disruption to its operations, allowing us to strengthen the company’s financial structure and position it for significant future growth,” CEO Brian Wright said in a statement.
In court documents, Bertucci’s said that the company has been affected by “a prolonged negative operating trend in an ever-increasing competitive price environment.” The company said that it has experienced declines in sales and revenues every year since 2011.
According to Technomic Top 500 Chain Restaurant Report data, the company’s system sales have declined from $199 million in 2012 to $183 million last year.
The company in its filing said it brought back its original executive chef, Rosario Del Nero, to bring back some favorite recipes. The company also offered limited time offers and other strategies, such as express lunches, to get people in the door.
Bertucci’s launched a mobile app and also implemented $5.3 million in cost savings last September by cutting staff and other expenses. It renegotiated leases, saving another $3.5 million.
The company said that it has identified 29 unprofitable leases that it intends to reject through the bankruptcy process.
Bertucci’s defaulted on a loan in late 2017 and received a forbearance earlier this year to restructure. That forbearance has expired, however, and nearly $38 million in debt has come due.
The company opted to file for bankruptcy and sell its assets. It entered into a purchase agreement with Right Lane Dough, known as a “stalking horse bidder,” on Sunday.
Bertucci’s has limited cash and “no realistic financing option” other than a $4 mllion loan to get the company through its bankruptcy process. As such, “the only alternative to the sale would be conversion to Chapter 7 and liquidation.”