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    Noon Mediterranean Sees a Path Forward from Bankruptcy

  • It wasn't so long ago the fast casual was on a rapid growth path.

    Noon Mediterranean
    Noon Mediterranean is looking for an investor to propel the brand into the future.

    One of the interesting realities of Noon Mediterranean’s recent bankruptcy filing is the fact that, not so long ago, the brand was a buzzing fast casual with all the makings of a category disruptor. Five years after launching, the chain—then known as VERTS Mediterranean Grill—was pushing 40 locations and laying the groundwork for explosive growth. Fresh off a rebrand and culinary upgrade, the founders told QSR in September 2016 they were targeting 250 stores by 2020. “It sounds like a lot, but it’s essentially just continuing the current speed of growth,” cofounder Dominik Stein said.

    In Early August, Noon, which flipped its name and branding the previous November, filed a petition for relief under chapter 11 in U.S. Bankruptcy Court in Delaware. Where did the once-promising fast casual veer off course?

    Stefan Boyd, the New York-based brand’s chief executive officer, said Noon simply made too many changes too quickly. From removing popular menu items to some of its expansion efforts, Noon outpaced its brand maturation.

    Boyd, who worked as acting CMO and handled other tasks, like finance, for Noon in the past, stepped into the top role August 1 after then-CEO Michael Heyne and Stein left the company. The founders are still small stakeholders, but are no longer involved in the day-to-day decisions around the brand, which they brought to market as VertsKebap in Austin, Texas, seven years ago.

    Boyd says Noon’s goal is to reorganize and “fix a lot of the issues that we weren’t able to outside of the court’s protection.” This includes some concerns on the lease and rent side, as well as taking steps to become a more financially profitable company anchored by a new focus and direction.

    Noon shuttered seven restaurants and laid off 89 employees as part of its reorganization, including 10 at its corporate headquarters. This included closing both its New York locations, which was once the target hub of major expansion. The brand moved its corporate office to the Big Apple last summer and once had plans to debut four NYC stores in 2017 alone. The brand’s East Coast presence is now restrained to a restaurant in Boston and one in Philadelphia (the rest are in Texas). Boyd says the 12 remaining units are making money, and there are no plans to reject future leases.

    This speaks to why Boyd believes the opportunity to move forward is a crystal one: “I think we have a lot of optimism internally,” he says. “We have really inspired people who understand that, yes, we made mistakes, but they’re not mistakes that can’t be undone. And with the new direction, we still have a really popular concept. We have really amazing food. And again, we have all the pieces we need to be successful, or I should say, to get back to our succeeding ways.”

    Up first, Boyd says, is finding an investor willing to infuse about $5–$10 million of capital into Noon to carry it through chapter 11. But it’s also looking for any and all investment structures. Then Noon can start effectively implementing many of the changes Boyd has in mind.

    He says Noon wants to engage with guests more than it has in the past. “And this goes across all areas of the company,” he says.

    A key change concerns menu decisions and deploying customers’ feedback more often than it has previously. Also, “perhaps bringing some things back on the menu that have been very popular in the past that we removed,” he adds, not willing to comment just yet on what those items could be. Although, Noon does plan to pilot its rotisserie meat cones to see if they’re operationally feasible.

    Another shift is the mentality of the company, he says. Noon wants to invest more in its operators by providing additional training, with the goal of helping them develop more of an owner-operator mentality. Doing so will help with consistency, both in product and experience, and will likely involve reducing some variety in the menu in favor of producing a more relatable everyday experience.

    “We do have to make some changes, obviously, because the entire driver of our situation is the fact that things, the way they stand right, now aren’t working. But once we’ve kind of made those changes to set ourselves off in a different direction, we plan to reduce the frequency of change in the future,” Boyd says, referring back to the issue that Noon morphed too quickly in the past.

    “Our operators know that we’ve made some bad decisions over the last year, but we have all the pieces we need to succeed, and if you look at the fundamentals, we have great motivated people working in our restaurants,” he adds. “And we have really fantastic food. So those are two kind of central building blocks of any restaurant chain, and if we can tweak some of the other elements that weren’t working, we have really good bones in this business.”

    Noon’s flip from Verts has been a challenge, Boyd says. However, it’s still too early in the process to really label the rebrand a success or failure. At the time, Heyne said Noon wanted to inspire a lunch-time vibe with a millennial-friendly positioning. Gin Lane, the agency that helped develop fast casual icon Sweetgreen, rebranded the restaurant from the inside out. Heyne said the old name, which translates to green in French, was hard to pronounce and didn’t resonate with guests. He added it felt industrial and didn’t conjure up any thoughts of food or the expanding culinary view of the concept.

    “It’s only been a matter of months since we rebranded and for most companies they see the effects of the rebrand play out over years,” Boyd says. “I think we have to more firmly identify ourselves as a new brand. We haven’t done that yet but I think we still have an opportunity.”

    “We’re going refocus around a mission of creating happiness,” he adds. “These are going to become the pillars over how we define ourselves over the next few months. As we do that more clearly, internally, it will also hopefully show to our guests, which will just kind of clarify what the brand is and what it stands for.”