More than a year since MOD Pizza was acquired in a deal believed to have staved off impending bankruptcy, the fast-casual pizza chain appears to remain in hot water.
Franchise disclosure documents filed earlier this year warn of recurring losses and a lack of capital, saying the Bellevue, Washington-based company was in default of its loan agreement.
Management also expressed doubt about the chain’s ability to continue as a going concern, suggesting the company's future is in doubt.
The fast-casual pizza chain was acquired in July last year by Elite Pizza Holdings, which is affiliated with Elite Restaurant Group, a collector of brands that have included Slater’s 50/50, Project Pie, Patxi’s Pizza and the family-dining chain Marie Callender’s. It’s not clear, however, which brands remain in Elite’s portfolio.
The acquisition of MOD, however, was believed to help the pizza chain avoid an impending bankruptcy last year.
Terms of the acquisition weren’t disclosed, but the then-512-unit chain said it hoped to restructure debt and shore up its capital structure.
Prior to the announcement, MOD had closed 44 underperforming company-owned restaurants in an effort to right-size the portfolio.
Now it looks like the closures have continued into this year.
In the franchise disclosure documents filed in June, MOD said 70 restaurants closed during 2024, ending the year with 482 in the U.S., including 406 company-owned and 76 franchised.
In a recent press release, the chain said it had more than 454 units in 26 states, indicating that another 28 have been shuttered so far this year.
Reports across the country offer some evidence, with closures reported in Milwaukee, Kalamazoo, Michigan, Portland, Oregon, Vienna, Virginia, and Missoula, Montana.
Last year, MOD's systemwide sales dropped more than 13% to $583 million, according to data from Restaurant Business sister-brand Technomic, which had the unit count at 485, a 12% decline.
MOD offcials, in a statement, said the company has been taking decisive, strategic steps to stabilize the business and position the brand for long-term growth.
"These efforts have included thoughtfully optimizing our restaurant portfolio, strengthening our operational foundation, and reinvigorating our focus on culture, Squad (or team members) and the guest experience," the company said. "Today's MOD is a stronger, more focused organization with a clear path forward."
MOD last week announced the hiring of Charae Carter Jenkins as vice president of marketing. Jenkins has held leadership roles at Chipotle, Raising Cane’s, and &pizza, and she founded CCJ Marketing Group, which worked with MOD, as well as brands like Papa John’s and Curry Up Now.
MOD was founded by Scott and Ally Svenson in 2008 and for years was one of the fastest-growing fast-casual pizza concepts. In 2021, MOD even filed confidential plans for an initial public offering, but it never came to fruition.
The lunch-focused fast-casual pizza as a category has not fared well since the pandemic, between the rise of delivery and fewer office workers looking for midday meals.
After the acquisition by Elite last year, one of the new owners first moves was to announce in September that it had hired National Franchise Sales to lead a comprehensive effort to refranchise company-owned units.
According to the franchise disclosure, however, as of April this year, none of the company restaurants had been sold to franchisees.
MOD isn’t the only restaurant chain dealing with mass closures this year.
Outback Steakhouse has been shuttering units, as has Noodles & Company, Salad and Go, Papa Murphy’s, Jack in the Box, Denny’s and Red Robin.
Lemonade Los Angeles, another brand owned by Elite, is also in the process of closing its units as it transitions to a virtual brand.
UPDATE: This article has been updated with a statement from MOD Pizza.
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