With a heightened number of office closures due to COVID-19 sagging traffic, Corner Bakery Café tapped DLA Piper as restructuring counsel, Debtwire, citing two sources familiar with the situation, reported Wednesday.
The fast casual engaged Stifel as its investment banker to explore strategic alternatives, one of the sources added. This could include a sale as Corner Bakery Café contemplates a workout.
Per Debtwire, Corner Bakery Café, backed by Roark Capital—the same fund behind Inspire Brands and FOCUS—recorded slightly less than $18 million in LTM (last 12 month) adjusted EBITDA and just under $350 million in LTM revenue through February 2020. Both figures slid dramatically since due to depressed traffic as a well as a pandemic-fueled catering hit, Debtwire said.
Two of the sources noted office closures proved especially problematic for Corner Bakery Café, “as a large part of its revenue is derived from catering for workplaces, as well as breakfast and lunch for commuters.”
Corner Bakery Café, founded in 1991, boasts corporate and franchised units in 23 states and Washington, D.C.
QSR reached out to Corner Bakery Café, but the company declined comment.
According to FoodserviceResults, Corner Bakery Café recorded $350 million in revenue in 2019, down 2.8 percent from $360 million in 2018. Its domestic unit count slipped to 174 from 180 and average-unit volumes inched forward to $1.977 million from $1.973 million.
Roark acquired Corner Bakery Café in 2011 when it was part of Il Fornaio Corp (it also brought sister concept Il Fornaio into its portfolio then as well). There were 119 locations at sale.
DLA Piper advised Roark in that deal, as well as previous acquisitions of Arby's, Carl's Jr./Hardees, and Auntie Anne's.
The company tapped the capital markets in 2017 to issue a senior secured term loan of undisclosed size, with participation from Kayne Anderson Capital Advisors, according to the Debtwire Primary Issuance Database.
Roark sold the Il Fornaio portion of its business to Create Restaurants in 2019—a sale that valued the Italian chain at $74 million. Proceeds from the deal went in part to pay down debt, a source told Debtwire.