The chain looks to create a restructuring plan after shuttering restaurants and failing to resolve a $12.5 million loan.
Wild Wing Cafe, with 24 stores in six states, declared bankruptcy earlier this month because of multiple pandemic pressures and a multi-million-dollar loan that it hasn't paid back.
Several restaurants reportedly closed leading up to the court filing.
The brand "experienced significant headwinds, unprecedented operational challenges, and severe pressure on margins as a result of the COVID-19 pandemic," CEO Mark Cote stated in court documents. He pointed to specific issues—material lease exposure from exited locations, management turnover, historic inflation and supply chain constraints, tight labor market and wage inflation, and government-mandated store closures.
The company owes $12.5 million on a loan from HomeTrust Bank. The funding came from the Main Street Lending Program, which was created by the Federal Reserve to provide dollars to small and medium businesses impacted by COVID. Additionally, Wild Wing Cafe has $500,000 left on a SBA loan.
"During the pandemic, any chance of dealing with operational issues in the normal course of business was extremely challenging and disruptive to the WWC’s guests and employees," Cote stated in the filing. "Operational control and management effectiveness were disrupted and exposed the company to weaknesses that were not previously identifiable, and the consequences impacted its financial stability."
Wild Wing Cafe took steps to restructure the company over the past several months. This included hiring management personnel with expertise in operations, supply chain, marketing, and franchise relations; establishing new leadership (hired Cote in September 2022 and industry advisor Craig Miller); shuttering failing locations; redeploying high-performing management to profitable restaurants; materially reducing corporate G&A; negotiating with vendors; and injecting capital to support ongoing operations.
The chain said efforts have started to bring positive results, but challenges remain. For example, it has been unsuccessful in restructuring its loan with HomeTrust.
"The Debtors therefore determined that this Chapter 11 filing was necessary to avoid further actions by HomeTrust or other creditors that would threaten the Debtors’ continued operations and to provide the Debtors the opportunity to address the claims and interests of all their stakeholders through a uniform process," Cote said. "The Debtors’ main goal is to reorganize under a consensual Chapter 11 Plan that maximizes the value of their estates and provides the greatest return possible to all of their creditors and stakeholders."
The restaurant comprises six corporate restaurants in the Carolinas and 18 franchised locations in Georgia, Alabama, Virginia, Tennessee, and the Carolinas.
Wild Wing Cafe was purchased by Charlotte, North Carolina-based Axum Capital Partners in 2012. At that point, the chain was based in Mount Pleasant, South Carolina, but it relocated its headquarters to Charlotte in 2016. One of the firms managing directors is Mushin Muhammad, a former NFL player with the Carolina Panthers. Another is Edna Morris, who previously served as president of Red Lobster when it was owned by Darden Restaurants.
The company once had high growth aspirations. In May 2013 Wild Wing Cafe announced an "aggressive" franchising strategy and planned to reach 100 stores by 2018. Then in 2021, the brand adjusted its 100-unit goal to 2028. Steve Weigel—the CEO at the time—claimed Wild Wing Cafe could reach 300 restaurants nationwide. At the time, it operated 40 stores.