The parent of the Brio Italian Mediterranean and Bravo Fresh Italian casual chains has filed for Chapter 11 bankruptcy protection and raised the possibility of seeking a buyer after closing 71 of its 92 remaining restaurants.
Management of the company, FoodFirst Global Restaurants, said the chains had been struggling with sales and profit declines before the COVID-19 pandemic. In January, 10 stores were closed and the viability of “a substantial number” of additional stores was being viewed, according to bankruptcy court documents. CEO and principal Brad Blum was replaced with Steve Layt, an industry veteran who had most recently served as CEO of NPC International’s Pizza Hut operations, one of the pizza chain’s largest franchisees.
The company was days away from a recapitalization when the pandemic hit, according to Layt.
“The COVID-19 outbreak truly could not have come at a worse time for our business,” he said in a statement. “The mandated dining room closure orders wiped out 60% of our restaurants within days and since then we have experienced nothing short of devastating sales declines.”
FoodFirst and its investors left open the possibility of further closures. Court documents indicate that 20 leases are scheduled for renewal in 2020. “The COVID-19 outbreak truly could not have come at a worse time for our business.” Layt said. “The mandated dining room closure orders wiped out 60% of our restaurants within days and since then we have experienced nothing short of devastating sales declines.”
“FoodFirst will continue to closely monitor the restaurants’ performance during the pandemic and the assorted state shelter-in-place orders to determine which locations remain viable,” the company said in the Chapter 11 filing. “In order to save jobs and the viable restaurants it will be necessary to pursue a company sale and an accompanying management services agreement.”
Antonio Bonchristiano, chairman of FoodFirst’s board and CEO of principal backer GP Investments, described the impact of the COVID-19 crisis as “irreversible.” GP is the parent of the Leon natural foods quick-service chain.
FoodFirst was formed in May 2018 by Blum, a onetime president of Olive Garden, as a holding company of health-oriented restaurant concepts. GP provided the funding. The partners acquired Bravo and Brio from their shareholders for $100 million that month.
At the time, the two chains collectively numbered 110 locations in 32 states, with total annual sales of about $400 million. Blum focused on revising the brands’ menus, improving food quality, renovating stores and upgrading operations.
“Unfortunately, the changes did not yield the results expected,” the company said in the bankruptcy filing. Sales fell to $307 million for 2019. Profits were eaten by high rents and rising food and labor costs.
Layt was brought in for a restructuring. He has been on the job for 11 weeks.
Most of the shuttered Bravo and Brio restaurants were closed as of March 20, when the COVID-19 crisis had already prompted many states to shut restaurant dining rooms.
An independent contractor named Robert Morrison has been brought in to serve as chief restructuring officer. Among his assignments is determining whether a sale of FoodFirst would be a better option than a liquidation.