Pinstripes — a restaurant-and-entertainment chain offering dining, bowling and bocce — has closed more than half its locations and filed for bankruptcy, citing inflationary pressures and consumers cutting back spending.
Northbrook, Illinois-based Pinstripes said it is seeking voluntary Chapter 11 protection in the U.S. Bankruptcy Court in Delaware. The company has also secured restructuring financing and lined up a stalking-horse bidder, its creditor Silverview Credit Partners, for some of its assets. Silverview, owed more than $115 million by Pinstripes, had made a $15 million offer to its debtor. Pinstripes plans to continue to market its properties.
Pinstripes had closed 10 of its 18 locations as of Monday, when it filed for Chapter 11. Those closings included restaurants in Chicago; Fort Worth, Texas; Norwalk, Connecticut; Overland Park, Kansas; and Paramus, New Jersey. The chain is already seeking approval to reject 14 leases, according to court documents.
In addition, Pinstripes “will be looking to work with landlords to restructure leases as it finalizes the portfolio of go-forward locations,” the company said, adding that its remaining restaurants will continue to operate throughout the bankruptcy process.
Pinstripes, serving Italian-American cuisine, is part of a wave of “eatertainment” venues, a guest experience that involves food or beverages, or both, before, after or during other activities, according to court filings. That category has come to encompass pickleball clubs, mini-golf courses, chains such as Dave & Buster’s and even axe-throwing sites.
“This filing will position Pinstripes for long-term stability,” Chris Soukup, chief operations officer, said in a statement.
Pinstripes “was inspired by an appreciation for building authentic connections with others by pairing food with entertainment, and prides itself on being a restaurant with bowling and bocce — not the other way around,” James Katchadurian, the company’s chief restructuring officer, said in an affidavit filed with the court.
Since its founding in 2007, Pinstripes has expanded to Florida, Maryland, Illinois, Ohio, Minnesota, Texas, Connecticut, Kansas, New Jersey, California and Washington, D.C., with several additional locations under construction in Washington and Florida. Its locations have 26,000 to 38,000 square feet of interior space, including bowling alleys, plus additional outdoor patio space that has outdoor dining, bocce courts and fire pits. Pinstripes is also an event venue for weddings, bar and bat mitzvahs, corporate meetings and birthday parties.
But then hard times came.
“The company has suffered from a series of challenges, including inflationary pressure across various sectors that have drastically and negatively affected their performance,” Katchadurian said. “In particular, increases in the cost of labor and commodities in recent years have raised the cost of ‘dining out.’ Like many other similarly situated restaurant-and-entertainment businesses, the debtors’ performance is acutely impacted by consumer preferences.”
Inflationary pressures forced consumers to pinch pennies, and “increasingly cost-conscious, preferences for out of home experiences began to shift to more cost-efficient alternatives,” according to Katchadurian.
“As a result, the debtors began facing an increasingly tight liquidity crunch at the same time that they most needed cash reserves to adapt to industry-wide changes,” he said.
“While the debtors were partially able to offset rising costs by gradually increasing menu prices, coupled with more effective purchasing practices, inflation and reduced customer traffic nonetheless placed significant strain on the debtors’ business and liquidity needs,” Katchadurian said. “At the same time, the debtors continued to expand, incurring costs for new store openings that were not yet generating, and ultimately never did generate, revenue.”
Pinstripes’ financial adviser, CR3 Partners, reviewed the financial performance of its restaurants and real estate portfolio. That survey identified locations that weren’t profitable or consistent with the chain’s go-forward business plan, as well as locations that won’t be purchased by the stalking horse.
Pinstripes and CR3 decided leases for those sites “should now be rejected, as no value maximizing alternatives exist given the significant costs” they incur, according to court filings.
For the record
Pinstripes Holdings is represented by Young Conaway Stargatt & Taylor as legal counsel and CR3 Partners as financial adviser.