An Illinois-based pizzeria chain that once rallied massive community support to avoid closure now faces another financial crisis.
According to The Street, Nick's Pizza & Pub has filed for Chapter 11 bankruptcy protection for the second time on December 2, 2024, with plans to continue operations while restructuring its business.
The Crystal Lake-based restaurant chain, which operates two locations in Illinois, listed assets between $100,000 and $500,000, while its liabilities range from $1 million to $10 million. This development comes as pizza chains nationwide grapple with mounting financial pressures, from inflation to increased operational costs.
The restaurant sector, particularly pizza chains, has weathered significant challenges in recent years. Several establishments have succumbed to financial pressures, with notable casualties including Chuck E. Cheese's parent company CEC Entertainment and California Pizza Kitchen in 2020.
Rising inflation has dramatically impacted food and labor costs, creating additional burdens for pizza establishments. Many chains carrying substantial debt loads have also been hit by increasing interest rates, which have elevated their debt service obligations.
The compounding effects of these economic pressures have forced various pizza chains to seek bankruptcy protection or implement significant restructuring measures.
The company's financial struggles date back to March 2011, when it discovered monthly losses of $30,000 and a 30% drop in sales. Owner Nick Sarillo's innovative approach to averting crisis caught attention.
In a remarkable display of community engagement, Sarillo reached out to 16,000 customers on the restaurant's email list, pleading for their support. The response was overwhelming, with sales doubling the following week and maintaining an 80% increase in the subsequent month.
Despite this earlier success, the company filed its first Chapter 11 petition in January 2020, just before the COVID-19 pandemic began disrupting businesses nationwide.
Next Level Pizza Inc., parent company of Oath Pizza, filed for Chapter 7 bankruptcy in October to liquidate its assets. The Boston-based company closed all corporate-owned locations by December 2023, leaving only three franchises operational. EYM Pizza, a Pizza Hut franchisee operating in five states, sought Chapter 11 protection in July. The Irving, Texas-based company's financial troubles were complicated by legal disputes with Yum Brands' Pizza Hut over unpaid royalties.
The Chicago suburban pizza chain's latest financial restructuring comes as it confronts familiar industry obstacles. These include managing perishable inventory and dealing with seasonal business fluctuations. Court documents indicate the company's commitment to maintaining operations throughout the reorganization process. The petition suggests that funds will be available for distribution to unsecured creditors.
Since its 1995 opening in the Chicago suburbs, Nick's Pizza & Pub has demonstrated resilience in facing industry challenges. However, the current economic climate, marked by persistent inflation and rising operational costs, has necessitated this second bankruptcy filing.
Nick's Pizza & Pub's second Chapter 11 filing represents its latest attempt to navigate financial difficulties while maintaining operations at its Crystal Lake and Elgin locations. The restaurant chain's decision to file for bankruptcy protection on December 2, 2024, aims to facilitate business restructuring and reorganization, with assets ranging from $100,000 to $500,000 against liabilities between $1 million and $10 million. The outcome of this reorganization effort will determine whether this Chicago suburban institution can once again emerge from bankruptcy and continue serving its community.
