The restaurant industry continues to face significant challenges, with another well-known pizza establishment seeking bankruptcy protection. Nick’s Pizza & Pub, based in Crystal Lake, Illinois, has filed for Chapter 11 bankruptcy protection for the second time in four years, marking another setback for the pizza restaurant sector.
The December 2, 2024 filing indicates the company plans to continue operations while restructuring its business. Operating two locations in Crystal Lake and Elgin, Illinois, the chain disclosed assets between $100,000 and $500,000, with liabilities ranging from $1 million to $10 million. Court documents reveal that unsecured creditors can expect to receive distributions from available funds.
This development follows a pattern of financial difficulties in the pizza restaurant industry. Several chains have encountered similar challenges in recent years, with factors including pandemic-related disruptions, rising inflation, increased food costs, and higher labor expenses contributing to their financial distress.
Nick’s Pizza & Pub, which opened its doors in 1995 in Chicago’s suburbs, has a notable history of community support during difficult times. In 2011, when facing losses of $30,000 monthly and a 30% decline in sales, owner Nick Sarillo reached out to 16,000 customers via email seeking support. The response was remarkable, with sales doubling the following week and maintaining an 80% increase in the subsequent month.
The establishment’s first Chapter 11 filing occurred in January 2020, just before the COVID-19 pandemic began impacting businesses nationwide. After successfully emerging from that bankruptcy, the company operated for more than four years before this latest filing.
Recent months have presented typical industry challenges for the chain, including managing perishable inventory and dealing with seasonal business fluctuations, according to court documents. The impact of inflation on operating costs has likely contributed to their current financial situation.
The pizza restaurant sector has witnessed several other bankruptcy filings in recent years. Next Level Pizza Inc., parent company of Oath Pizza, filed for Chapter 7 bankruptcy in October to liquidate assets after closing all corporate-owned locations by December 2023. Only three franchised locations remain operational in El Segundo, California; Poulsbo, Washington; and Wellesley, Massachusetts.
Similarly, EYM Pizza, a Pizza Hut franchisee operating in multiple states, filed for Chapter 11 protection in July, seeking to sell its assets. The company had previously faced legal challenges with parent company Yum Brands over unpaid royalties.
Other notable pizza chain bankruptcies in recent years include Chuck E. Cheese’s parent company CEC Entertainment and California Pizza Kitchen in 2020, followed by CiCi’s in 2021. These cases often cited pandemic-related difficulties as contributing factors.
The industry’s challenges extend beyond pandemic effects, with rising interest rates impacting debt service costs for leveraged companies. Legal disputes with landlords, lenders, and other creditors have also driven some establishments to seek bankruptcy protection as a means to halt mounting legal expenses.
Despite these challenges, Nick’s Pizza & Pub’s latest bankruptcy filing indicates an intention to reorganize rather than liquidate, suggesting potential for recovery through restructuring efforts. The availability of funds for unsecured creditors also points to some underlying business viability, even as the company works to address its financial obligations and operational challenges.