Bankrupt FoodFirst Global Restaurants is seeking approval to sell at least 45 of its stores to GPEE Lender in the form of a $25 million credit bid, $50,000 in cash, and $4.5 million in assumed liabilities.
GPEE is an entity formed by GP Investments, the ultimate owner of FoodFirst, and Earl Enterprises, which owns and operates more than 200 locations under brands like Planet Hollywood, Bucca di Beppo, Bertucci’s, and Earl of Sandwich.
FoodFirst oversees Brio Tuscan Grille, which was renamed Brio Italian Mediterranean, and Bravo Cucina Italiana, which was renamed Bravo Fresh Italian. Brio is classified as an upscale casual-dining brand while Bravo is defined as a core casual-dining restaurant.
When FoodFirst filed bankruptcy on April 10, it had nearly 100 units in the U.S., but only 21 were in operation due to the COVID-19 pandemic. Government-mandated closures led to 6,000 furloughs. Since then, the company has reopened seven more units. Fifty-three units are still under lease.
According to court documents, FoodFirst started negotiations with Earl Enterprises shortly before filing bankruptcy. The two sides preliminarily agreed to a management agreement and debtor-in-possession loan with the assumption that a sale would have to go through a Chapter 11 bankruptcy proceeding.
While FoodFirst sought court approval of the management agreement and DIP loan during bankruptcy proceedings, two other parties showed interested. The restaurant created a data room for all interested parties with the understanding that whichever party was chosen as the manager and lender under the DIP loan would likely purchase the assets.
When GPEE was approved to extend the DIP loan, the other parties dropped out of the running.
After the bankruptcy filing, PHL Holdings, an entity jointly owned by GP Investments and Earl Enterprises, purchased $30 million in prepetition secured debt from two of FoodFirst’s lenders.
GPEE can credit bid up to $40 million, but the filing stated that “it is highly unlikely that any other potential buyers will submit an offer approaching, let alone exceeding, the amount of the Purchaser’s offer.”
When FoodFirst took the reins in 2018, Bravo and Brio operated a combined 110 locations in 32 states and had sales in excess of $400 million in 2017 with around 10,000 employees.
As part of the changes, headquarters moved from Columbus, Ohio, to Orlando, Florida, and new Italian Mediterranean menus were implemented. The changes did not have the intended effect as sales dropped to $307 million in 2019. According to court documents, customer satisfaction increased, but labor costs, employee turnover, and a large number of underperforming restaurants sank sales volume and profitability.
CEO Steve Layt, a former Pizza Hut executive, took over in late January to lead a turnaround, but the COVID-19 pandemic exacerbated FoodFirst’s struggles.
FoodFirst is the latest in a string of companies that have been recently bought out of bankruptcy. Belgian bakery chain Le Pain Quotidien agreed to sell its U.S. assets to restaurant operator Aurify Brands for $3 million Southern fast-food chain Krystal agreed to a nearly $50 million offer from Fortress Investment Group. A week later, Fortress agreed to purchase Craftworks Holdings, parent of Logan’s Roadhouse and Old Chicago, for $93 million after originally offering $138 million.
