Vegan chain By Chloe declares bankruptcy

The fast casual, once a rising star of emerging concepts, blamed the pandemic for its troubles and is seeking a buyer.
Photograph courtesy of By Chloe

Plant-based fast-casual By Chloe, once a rising star among emerging restaurant chains, declared bankruptcy Monday and its CEO has resigned, according to court documents.

The New York City-based vegan chain filed for Chapter 11 protection and is seeking to put itself up for sale by mid-February. James Haber, CEO of parent company ESquared, has agreed to resign and step away from day-to-day operations of the company.

By Chloe blamed the bankruptcy filing on the impacts of the pandemic, which has forced the closure of three of the chain’s 14 locations since March and cut monthly revenue by about 67%, according to the bankruptcy filing. Other restaurants were operating at reduced capacity, forcing By Chloe to furlough or lay off more than half of all employees.

By Chloe previously received a Paycheck Protection Program loan of $2.67 million and has submitted an application for forgiveness.

The chain listed unsecured debt of approximately $2.5 million, along with other approximate unsecured debut of $250,000 for payroll, gift card liability and more.

Over the years, By Chloe has been embroiled in an ongoing legal dispute with its namesake and co-founder Chloe Coscarelli. Coscarelli, known for appearing on the Food Network, left the brand in 2017 after the parent company sought to remove her. An arbitrator in the case called her “grossly negligent” with the business.

The dispute has continued, with Coscarelli serving a demand for arbitration last year.

In September, the arbitrator issued a final award that “if confirmed by the NY Federal District Court, would award Chef Chloe attorneys’ fees and costs totaling $2,265,838.60,” according to the bankruptcy filing. The case remains pending confirmation.

In 2018, By Chloe landed a $31 million investment from a number of funds, including Bain Capital and the Kitchen Fund, to accelerate its growth.

The chain was known for emphasizing minimally processed foods to create playful, social media-ready dishes like Oh So Fancy Fries and Matcha Kelp Noodles with cashew cream sauce and almond “Parmesan.”

The chain, which was founded in 2015, had been growing in recent years, with sales climbing 25.6% in 2019 over the previous year, according to Restaurant Business sister company, Technomic.

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