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MOD_Pizza_storefront.jpeg Photo courtesy of MOD Pizza
MOD Pizza

MOD Pizza is exploring ‘all options’ to improve capital structure

MOD Pizza has closed dozens of restaurants this year as it explores options to improve its capital structure.

The wave of 2024 restaurant bankruptcies may not be breaking anytime soon. A report surfaced earlier this week from Bloomberg that Seattle-based MOD Pizza is the latest chain to consider such a move. That report was followed by a Wall Street Journal report that MOD hired legal and financial advisers to work on a “potential bankruptcy filing” while searching for a buyer.

In a statement emailed to Nation’s Restaurant News, a MOD spokesperson confirmed that the company is exploring “all options,” but did not confirm what those options were: “We have a brand guests love, a passionate team, and a solid turnaround plan underway that is making progress. We’re working diligently to improve our capital structure and are exploring all options to do so. Since this is an ongoing process, it would be inappropriate to speculate about an outcome.”

MOD finished 2023 with 553 locations, a 4.1% increase over 2022. It also grew sales last year by 5.7%, to $699.2 million, according to Technomic data. Indeed, up until recently, MOD has been growing steadily:

  • In 2019, the company ended the year with 467 locations and $483.5 million in sales
  • In 2020, the company inched up to 489 despite COVID, and $461 million in sales
  • In 2021, the company finished with 506 locations and $590 million in sales
  • In 2022, the company finished with 531 locations and $661.8 million in sales

Through that growth, MOD even considered an IPO in 2021, though that market debut never happened. At that time, the company was still riding momentum from a 2019 $160 million equity investment, which sparked the company’s goal to reach approximately 1,000 locations by 2024. Instead, the chain has grown nominally and has closed several locations so far this year; the company’s website now lists 512 open locations, from December’s 553.

The company was founded in 2008 and was part of a burgeoning “build your own” fast casual pizza category that also included players like Blaze, Pieology, Pie Five, PizzaRev, and more. In 2023, Pieology closed 8.4% of its locations, while Blaze closed 2.3%. Pie Five is about two-thirds the size it was during its heyday in the early 2010s, according to Technomic.

MOD’s current exploratory position comes as the company settles into new leadership. In January, the company appointed Beth Scott as its new CEO after cofounder and longtime CEO Scott Svenson stepped down after 15 years. In April, MOD named Jennifer Anderson as its new CMO. It also comes as a growing number of chains are struggling. So far this year, there have been high profile bankruptcies from the likes of Rubio’s Red Lobster, and Tijuana Flats There has also been a host of filings from smaller, less capitalized concepts, such as Party FowlBoxer RamenSticky FingersOberweis DairyFoxtrot/Dom’s KitchenMelt Bar & Grilled and Kuma’s Corner.

While some companies are working out their debts through the courts, others are targeting a turnaround by closing underperforming units. This list includes HootersPizza Hut, Applebee’s, Outback Steakhouse, Cracker Barrel, TGI Friday’s, Denny’s, and MOD Pizza. Meanwhile, BurgerFi is searching for “strategic alternatives” to manage its debt.

Contact Alicia Kelso at [email protected]

TAGS: Finance
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