Chain seeks a $30 million bridge loan as it restructures debt
California Pizza Kitchen is hoping to avoid bankruptcy by restructuring its debt, a source told The Wall Street Journal.
The pizza chain hired Alvarez & Marshal Holdings LLC and Guggenheim Partners to facilitate discussions with lenders. Five bids were submitted as part of a sales process earlier in the year, but the pandemic brought the process to a halt, the Journal reported. Now California Pizza Kitchen wants a $30 million bridge loan as it looks to restructure debt over the next six months. FTI Consulting Inc. and Gibson, Dunn & Crutcher LLP were hired as legal representatives, sources told the outlet.
The brand, which opened its first store in 1985, went public in August 2000. Golden Gate Capital purchased and privatized the chain in July 2011 for $470 million. The chain ended 2019 with 200 domestic locations.
Two years after Golden Gate acquired California Pizza Kitchen, the private equity firm added more debt to pay itself a multimillion-dollar dividend, The Journal said. Since that time, the brand has had difficulty paying off loans.
In 2019, the brand made roughly $635 million in total sales, down from $640 million in 2018, according to FoodserviceResults. Average unit volume stood at $3.14 million in 2019, a slight increase year-over-year.
After dining rooms shut down, California Pizza Kitchen shifted to a takeout, curbside pickup, and delivery operation. To combat sinking sales due to the pandemic, the brand launched CPK Market at the end of March in which customers can order meal kits or individual pantry, fruit, vegetable, meat, and alcoholic beverage items at locations nationwide.
The COVID-19 crisis has made a brutal impact on full-service restaurants struggling financial prior to the pandemic.
CraftWorks Holdings, the parent of Logan’s Roadhouse and Old Chicago Pizza, filed for bankruptcy not too long before dining rooms began to close across the country. The massive interruption to business ruined the bankruptcy plans, causing the chain to fire nearly all of its employees and close its restaurants. The brand hopes to reopen 125 units, cutting its footprint by more than 50 percent.
FoodFirst Global Restaurants, parent of BRAVO Cucina Italiana and BRIO Tuscan Grille, filed for bankruptcy April 11 due to the negative effects of the COVID-19 pandemic. Sales dropped from $400 million in 2017 to $307 million in 2019. The company closed 71 of its 92 U.S. locations in March and furloughed 6,000 employees.
TGI Fridays was set to merge with Allegro Merger Corp., but the $380 million deal fell through because of current economic conditions. In terms of sales, Q4 comps dropped 9.4 percent at corporate stores, 12.8 percent at franchises, and 1.3 percent systemwide.