All locations are closed to preserve cash during court proceedings.
Eatertainment chain Punch Bowl Social filed for bankruptcy Tuesday, citing the damaging effects of restrictions and the public’s uneasiness to enter shared spaces.
The brand, which offers a selection of games like bowling, shuffleboard, karaoke, and vintage arcade games in 15,000 to 30,000 square feet, said that it was operating just three of its stores (Arlington, Virginia; Atlanta, and Austin) as recently as the week of December 8. However, because of capacity limits and consumer’s hesitancy to go out during the pandemic, each of those units was losing money on a daily basis. Punch Bowl decided to close the three remaining locations to preserve cash during bankruptcy proceedings.
Court filings showed estimated assets and liabilities of between $10 million and $50 million. The brand received a $10.1 million Paycheck Protection Program loan from JP Morgan Chase Bank.
Punch Bowl, founded in 2012 by Robert Thompson, made headlines in July 2019 when Cracker Barrel decided to invest up to roughly $140 million to purchase a non-controlling stake in the brand. The deal even included provisions that would’ve allowed Cracker Barrel to acquire a controlling interest or full ownership in the future.
When COVID hit in March, Punch Bowl closed all of its 20 locations at the time and laid off most of its restaurant and corporate staff. Cracker Barrel decided to cut ties with the brand so it could focus on the core business. The casual-dining brand also noted the uncertainty of Punch Bowl’s viability amid the COVID crisis. Cracker Barrel took more than a $130 million hit after the move.
In August, Thompson stepped down as CEO and was replaced by John Haywood, the former CEO of Souplantation and Sweet Tomatoes, which filed Chapter 7 bankruptcy earlier this year and permanently shut down. Prior to that, he worked as an independent restaurant industry acquisition and restructuring specialist for 12 years.
At that time, the Denver Business Journal reported that after six months of full operations, Haywood planned to turn his attention toward growth options and finding investors because partial owner CrowdOut, a non-bank lender for middle-market companies, doesn’t plan to maintain permanent ownership. He also said 2020 openings would be delayed until spring 2021, at which point Punch Bowl would start looking at new markets. Haywood was working to reopen 16 stores after four shuttered permanently because of disputes with landlords.
COVID has been treacherous for eatertainment brands. In June, CEC Entertainment, parent of Chuck E. Cheese, filed for bankruptcy. from March 17 to 26—when dining and arcade rooms were first closed—comparable venue sales dropped 94 percent year-over-year. In early April, the company furloughed most of its hourly employees and approximately 65 percent of its support center personnel and suspended rent, which costs $7 million per month. Later in April, it formed a restructuring committee to evaluate strategic alternatives, including a possible bankruptcy filing.
Dave & Buster’s same-store sales dropped 75 percent in August, 62 percent in September, and 59 percent in October. In Q3, revenue totaled $109.1 million, a decline from $299.4 million last year. It swung a net loss of $48 million and an adjusted EBITDA loss of $16 million.