With an increasing number of unpaid leases, and a shrinking supply of cash, California Pizza Kitchen officially filed for bankruptcy on Thursday July 30. With 200 locations and more than $400 million in debt, the chain hopes to close its more unprofitable locations in an attempt to stay afloat.The brand has been seeking a buyer for almost a year, a process which slowed once the Coronavirus pandemic hit the US. At that point, the company took on a $30 million infusion of capital and negotiated $47 million in financing from its lenders to get through the bankruptcy process.
While not all of California Pizza Kitchen lenders support the deal, Hyatt, CEO of the brand said in the filing that, “No restaurateur in the world … has been unaffected by the COVID-19 pandemic. For many restaurants, the COVID-19 pandemic will be the greatest challenge they will ever face.”
While the brand notes delivery and fast-casual trends as part of the reason for the bankruptcy, they also cited Covid-19 as intensifying the negative effects of theses trends on the business. Sales were down 40% in the last week of June, and the the last three months saw a negative cash flow of $18.9 million for the last three months, even without paying rent or towards some of the company’s debt.
The company hasn’t said which locations are underperforming yet, leaving many wondering which locations and how many will close. Do you have a California Pizza Kitchen in your shopping center or mall? Now is the time to line up potential tenants to fill their space. Let Retailsphere help you identify and connect with emerging and thriving retail brands. Sign up today for a no-obligation demo to see how easy your tenant search can be.