Popular Italian restaurant chain files for Chapter 11 bankruptcy

The fast-casual restaurant chain segment has struggled in the years since the Covid-19 pandemic shut down restaurants and businesses across the nation.

Many restaurants were able to transition to delivery, takeout and drive-thru models and survived until the Covid pandemic subsided. But the financial shortfall caused by restaurants shutting down dining rooms led many to file for Chapter 11 bankruptcy protection, or, in some cases, Chapter 7 liquidation.

In some cases, it took years before financial distress forced restaurant chains to filed bankruptcy. Red Lobster is the most significant chain to file, as it submitted its Chapter 11 petition on May 19 and closed 93 restaurants permanently.

Rubio’s Coastal Grill claimed it was victimized by California’s AB 1228, which increased the minimum wage for fast-food workers working at chains that have more than 60 locations in the state from $16 to $20 per hour.

The Mexican fast-casual chain on June 5 filed Chapter 11 bankruptcy and closed 48 locations in the Golden State. It had a total of 134 locations in California, Arizona and Nevada before filing.

The Italian restaurant chain segment has a history of financial distress and bankruptcy filings, as well.

The parent of Brio Tuscan Grill and Bravo Cucina Italiana restaurants FoodFirst Global in April 2020 filed for Chapter 11 bankruptcy as the Covid-19 pandemic pushed the company into filing after struggling before the Covid outbreak.

Two months after FoodFirst filed bankruptcy, Earl Enterprises purchased the Italian restaurants out of bankruptcy.

The owner of Johnny Carino’s Italian restaurant chain Fired Up in July 2016 filed for Chapter 11 protection a second time after filing a first time in 2014.

Longtime shopping mall Italian fast-food chain Sbarro, which currently has over 700 locations worldwide, filed for Chapter 11 bankruptcy in 2014, suffering from high food, labor and lease costs. It had filed bankruptcy previously in 2011.

Finally, popular Italian restaurant chain Buca di Beppo on Aug. 4 filed for Chapter 11 bankruptcy protection seeking to reorganize with the support of its lenders.

The Orlando, Fla.-based fast-casual restaurant chain’s largest equity holder Buca Investments and nine affiliates filed their petitions in the U.S. Bankruptcy Court for the Northern District of Texas in Dallas listing $10 million to $50 million in liabilities. The debtors will seek joint administration of their cases.

The debtors asserted that the chain’s operations “have been impacted by a significant drop in sales, rising food and labor costs, continued staffing challenges, and changes to customers’ preferences,” according to court papers.

Buca di Beppo, which in the last week closed 13 underperforming locations that included restaurants in Sacramento and Salt Lake City, currently operates 44 core locations in 14 states, two international locations and is in the process of opening one new location, according to an Aug. 5 company statement.

The chain has three locations across the Las Vegas Valley.

“This is a strategic step towards a strong future for Buca di Beppo,” company president Rich Saultz said in the statement. “While the restaurant industry has faced significant challenges, this move is the best next step for our brand. By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future.”

The family-style Italian restaurant chain, which was established in Minneapolis in 1993, grew to as many as 95 locations by 2013 before it began closing restaurants, according to Restaurant Business.

The restaurant chain was purchased by Robert Earl’s Planet Hollywood International in 2008 and is currently owned by Earl Enterprises.