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Financing

These restaurant chains have declared bankruptcy due to the coronavirus

They could be “the tip of the iceberg,” as one CEO warned.
Vapiano
Photograph: Shutterstock

The coronavirus pandemic and ensuing shutdown have had a massive impact on restaurants, with industry sales at one point cut in half compared to last year. Some chains that had been struggling before the pandemic were unable to weather the storm.

Seven chains have declared bankruptcy, though these may well be “the tip of the iceberg,” as HopCat CEO Mark Sellers said after his chain filed earlier this month. Here's a look at the restaurant chains that have filed for credit protection since the shutdown began.

Vapiano

The German chain of Italian fast casuals filed an application in Cologne, Germany, to open insolvency proceedings in early April.

It operated six units in the U.S. and blamed its financial problems on closures related to the COVID-19 outbreak.

“No solution could be found” for the company’s liquidity problem, “which has increased significantly due to the COVID-19 crisis.” All of the chain’s locations remained closed “until further notice” due to the coronavirus crisis.

FoodFirst Global Restaurants

The parent of the Brio Italian Mediterranean and Bravo Fresh Italian casual chains filed for Chapter 11 bankruptcy protection in mid-April and raised the possibility of seeking a buyer after closing 71 of its 92 remaining restaurants.

FoodFirst said the chains had been struggling with sales and profit declines before the COVID-19 pandemic. “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,” said CEO Steve Layt.

In late May, concept collector Robert Earl teamed up with the financial backer of the brands to buy 45 of the chains’ locations for $50,000 in cash, $25 million in forgiven credit and $4 million in assumed liabilities.

TooJay’s

TooJay’s Original Gourmet Deli filed for federal bankruptcy protection in late April, blaming the weekslong coronavirus shutdown for taking what had otherwise been a profitable company into the red.

The 28-unit New York-style deli concept had received a $6.4 million Paycheck Protection Loan shortly before the filing, which it planned to use on payroll and expenses.

Sustainable Restaurant Holdings

The parent company for seafood chains Bamboo Sushi and QuickFish filed for federal bankruptcy protection May 12, blaming the coronavirus shutdown for limiting its ability to generate revenue or get financing to make it through the crisis.

It operated 10 restaurants at the time, and had furloughed or laid off 90% of its employees in March.

By filing for bankruptcy, the company was able to secure financing to stay in business while it looks for a buyer. Sustainable Restaurants said funds from investor Bain Capital and available cash would help it continue to operate through the bankruptcy process.

Garden Fresh Restaurants

The owner of buffet chains Souplantation and Sweet Tomatoes, filed for Chapter 7 bankruptcy protection in mid-May, opting to liquidate its assets and close its doors for good.

The filing came shortly after executives notified the company’s 4,400 employees that its 97 restaurants would not reopen after their initial March closure.

Executives said they saw no proper strategy for reopening as federal regulations forbid self-service operations such as salad bars.

Le Pain Quotidien

The fast-casual chain filed for Chapter 11 bankruptcy protection May 27 and proposed a sale to Aurify Brands for $3 million to save some of its operations.

The chain, which had been struggling before the pandemic, closed all of its stores amid the coronavirus crisis and laid off the majority of its employees.

A sale to Aurify would allow for the reopening of at least 35 of its 98 restaurants and avoid a liquidation, Le Pain said in its filing.

BarFly Ventures

The parent of the HopCat brewpub chain filed for Chapter 11 bankruptcy protection June 3, citing the challenges of operating beer-focused restaurants while dining rooms are closed because of the COVID-19 pandemic.

The company operates three one-of-a-kind restaurants in Grand Rapids, eight HopCats in Michigan and three outside the state. HopCat revenues fell 100% after the pandemic hit, said CEO and founder Mark Sellers.

In testimony before the Regulatory Reform Committee of Michigan’s House of Representatives, Sellers warned that his company’s bankruptcy is “the tip of the iceberg,” and that “there is going to be a giant wave of bankruptcies very soon.”

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