Popular Italian restaurant chain files for Chapter 11 bankruptcy

The fast-casual restaurant segment has faced significant challenges since the Covid-19 pandemic forced widespread shutdowns across the nation. While many establishments adapted by pivoting to delivery, takeout, and drive-thru models, the financial repercussions of closing dining rooms led numerous chains to seek bankruptcy protection.

The Impact of Financial Distress

Some restaurants took years to succumb to financial distress, culminating in bankruptcy filings. Red Lobster emerged as a notable case, filing for Chapter 11 on May 19 and permanently closing 93 locations.

Rubio’s Coastal Grill claimed that California’s AB 1228, which increased the minimum wage for fast-food workers at chains with over 60 locations from $16 to $20 per hour, significantly impacted its operations. The Mexican fast-casual chain filed for Chapter 11 bankruptcy on June 5, closing 48 of its 134 locations in California, Arizona, and Nevada.

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The Italian Restaurant Sector’s Ongoing Struggles

The Italian restaurant segment has a history of financial troubles as well. FoodFirst Global, the parent company of Brio Tuscan Grill and Bravo Cucina Italiana, filed for Chapter 11 bankruptcy in April 2020, driven into financial distress by the pandemic after previously struggling. Earl Enterprises acquired the Italian brands shortly after.

Johnny Carino’s parent company, Fired Up, faced its second Chapter 11 filing in July 2016, having previously filed in 2014.

Additionally, Sbarro, a longstanding mall staple, filed for Chapter 11 in 2014 due to escalating food, labor, and lease costs, marking its second bankruptcy after a previous filing in 2011.

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Buca di Beppo Files for Bankruptcy

Most recently, Buca di Beppo, a popular Italian chain, filed for Chapter 11 bankruptcy protection on August 4, seeking to reorganize with the backing of its lenders. Buca Investments and nine affiliates submitted their petitions in the U.S. Bankruptcy Court for the Northern District of Texas, listing liabilities between $10 million and $50 million. The debtors are requesting joint administration of their cases.

In court documents, they cited a “significant drop in sales, rising food and labor costs, continued staffing challenges, and changes to customers’ preferences” as key factors affecting their operations.

The Orlando-based chain recently closed 13 underperforming locations, including sites in Sacramento and Salt Lake City, leaving it with 44 core locations in 14 states and two international sites. The company is also in the process of opening a new location.

Looking Toward the Future

“This is a strategic step towards a strong future for Buca di Beppo,” stated company president Rich Saultz. “While the restaurant industry has faced significant challenges, this move is the best next step for our brand. By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future.”

Founded in Minneapolis in 1993, Buca di Beppo expanded to as many as 95 locations by 2013 before beginning to close restaurants. The chain was acquired by Robert Earl’s Planet Hollywood International in 2008 and is currently owned by Earl Enterprises.

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