With pandemic-induced lockdowns forcing restaurants to shutter for weeks or even months on end, some are left with no choice but to close down permanently or file for bankruptcy protection in the hopes of saving their businesses.
Punch Bowl Social, once among the biggest names in the restaurant business with its blend of exclusive food, karaoke, and games like ping pong and virtual reality -- only to see that business go kaput when the global health crisis broke out -- declared bankruptcy this week.
Other prominent restaurants that have sought bankruptcy protection during the crisis include Chuck E. Cheese's parent company, Ruby Tuesday and J. Crew. According to analysts, a new wave of bankruptcies will come after the holidays.
The Denver-headquartered restaurant chain disclosed that two of its branches would remain in operation, in Atlanta and Austin, although its other locations have been shuttered. Punch Bowl registered seven straight years of growth before the pandemic struck.
In the Chapter 11 filing, the eight-year-old company posted between $10 million and $50 million in liabilities to between 200 and nearly a thousand creditors. Punch Bowl reported the same projected amount in assets.
Cracker Barrel poured in around $140 million for a share in the company in 2019, and Punch Bowl had grown to 20 branches by the time lockouts were enforced in March.
The pandemic erased the company's customer base, and Cracker Barrel decided it would just scrap its future investments instead of helping Punch Bowl survive the storm.
Not long after, chief executive officer Robert Thompson, who founded Punch Bowl in 2012, left the company.
CrowdOut became a partial owner of Punch Bowl, replacing Thompson with John Haywood, former chief executive of Sweet Tomatoes and Souplantation, which also filed for bankruptcy as a result of the crisis.
"The company had no advance knowledge in regards to the bankruptcy filing by two former executives," Eat This quoted Punch Bowl as saying in a statement, adding it is not sure if the filing is even legal, "and our secured lender, CrowdOut, and legal counsel are currently working to resolve this issue."
Punch Bowl owes CrowdOut $20 million, which foreclosed on the company in August. The company also owes over $10 million for a Payment Protection Program loan to JPMorgan Chase, its top creditor.
Based on data by S&P Global, over 50 retail bankruptcies have been filed for 2020 -- the highest number in 11 years. In what is now a too-familiar narrative, the debtors' businesses were immediately impacted by the pandemic, the company disclosed in its bankruptcy filing.
