Bertucci’s Corp. filed for Chapter 11 bankruptcy protection, the company announced Monday (April 16). The Northborough, Massachusetts-based pizza chain also revealed that it has a deal lined up to sell the business for about $20 million to an affiliate of Chicago-based investment firm Right Lane Capital LLC.
Bertucci’s 59 restaurants in 11 East Coast states are still open, the company said, although court papers show it plans to reject 29 money-losing leases, and could still close some locations. Bertucci’s said it “anticipates completing its restructuring process expeditiously so the company will emerge under new ownership, with an improved financial position and stronger brand.”
Right Lane Dough Acquisitions is serving as the Stalking Horse Bidder. Under the purchase agreement, it agreed to acquire substantially all of Bertucci’s assets and assume certain liabilities, subject to higher “or otherwise better offers.” The current offer includes $1.7 million in cash, $14 million in new second-lien debt, and whatever bankruptcy financing is available come closing. Bertucci’s, which is owned by Levine Leichtman Capital Partners out of Los Angeles, has about $119 million in debt, according to a court filing. Global Franchise Group, LLC, a portfolio company of Levine Leichtman Capital Partners, purchased 440-unit quick-service brand Round Table Pizza in September for an undisclosed amount.
Bertucci’s will consider all bids for a sale or restructuring of the company during the open Bankruptcy Court-approved sale process. As part of the filing, Bertucci’s said it sought Bankruptcy Court approval for the consensual use of cash collateral and $4 million in debtor-in-possession financing, which will allow the company to meet its post-filing obligations in day-to-day business, Bertucci’s said.
"Today's filing is expected to be seamless for Bertucci's guests, trading partners and vendors, and result in minimal disruption to its operations, allowing us to strengthen the company's financial structure and position it for significant future growth," Brian Wright, CEO, said in a statement. “We are grateful for the service and loyalty of our team members and are looking forward to focusing on a return to Bertucci's roots: authentic, high quality, fresh ingredients that guests and team members alike crave and care about."
Wright will remain CEO, and Brian Connell, Bertucci’s chief financial officer, is expected to stay in his post as well.
According to The Wall Street Journal, Bertucci’s hired Hilco Real Estate LLC in January to review its leases and negotiate terms—a move that has saved the company $3.5 million on 17 leases. In total, with job cuts and other maneuvers, the company saved more than $5 million.
Connell, however, noted that the cost-cutting efforts haven’t reversed the brand’s negative sales trend, and sales have declined since 2011. A forbearance agreement with lenders expired in 2018 as well.
Bertucci’s debuted in Somerville, Massachusetts, in 1981. It hit its peak in the late 1990s when there were over 100 restaurants. There are 969 full-time employees and 3,245 part-time employees. The restaurant is known for its brick-oven pizzas, handcrafted pastas, exhibition kitchens, and homemade Italian signatures.
Bertucci’s credited its struggles to overall industry setbacks, especially in the casual-dining sector.
The company wrote in a filing: "With the rise in popularity of quick-casual restaurants and oversaturation of the restaurant industry as a whole, Bertucci’s—and the casual family dining sector in general—has been affected by a prolonged negative operating trend in an ever increasing competitive price environment. Consumers have more options than ever for spending discretionary income, and their preferences continue to shift towards cheaper, faster alternatives."
Bertucci’s switched up the menu by reviving classic recipes in 2016 and launched a mobile app in September 2017, but couldn’t deliver on its debts in time. It also tried to ignite a new daypart with Express Lunch, which promised to serve food in 15 minutes or less—an initiative similar to the one Buffalo Wild Wings rolled out in 2016.