TooJay’s, a 28-unit deli chain based in South Florida, filed for bankruptcy Wednesday.
CEO Max Piet said the bankruptcy was a “direct result of the devastating economic impact of the COVID-19 pandemic.”
“This course of action will enable us to remain open to serve our communities with the same great food and service we are known for,” Piet said in a statement to Florida media outlets. “As we learn of the reopening plans for our dining rooms, we will rehire more employees and expand our services as restrictions allow.”
Florida Gov. Ron DeSantis announced Wednesday that restaurants may allow dine-in services at 25 percent capacity beginning Monday, except for Miami-Dade, Broward, and Palm Beach counties.
The company filed for bankruptcy despite securing a $6.4 million loan from the Paycheck Protection Program that it will use on payroll and other expenses, like future rent. In addition to the PPP loan, TooJay’s has $33 million in secured debt across 10 lenders. The company estimates it’s worth between $44 million and $50 million.
The filing said business was operating profitably, prior to the COVID-19 outbreak. There were plans to expand the chain into more parts of Florida and the Southeast. But in March, the pandemic caused “the temporary or indefinite closure of the majority of Debtors’ restaurants and seriously affected the Debtors’ operations, revenues, and workforce.” A spokesperson told the South Florida Sun-Sentinel that no decision has been made about permanently closing any location.
The chain reduced management from 1,114 full-time employees at the end of February to 290 full-time workers on March 29. At the same time in 2019, there were 1,635 employees.
“The reduction in sales has made it difficult for TooJay’s to maintain the level of profitability to which it has historically enjoyed and which it needs to continue operating its businesses,” the filing said.
TooJay’s said it filed the bankruptcy to preserve the value of assets and operations, restructure debt, negotiate a plan of reorganization, and work with landlords.
“The Debtors have successfully operated a profitable enterprise for many years and are well known in the locations in which they operate,” the filing said. “They project that the lifting of closures anticipated over the next two months will rehabilitate their operations.”
The COVID-19 pandemic has pushed other companies to the edge, as well.
FoodFirst Global Restaurants, parent of BRAVO Cucina Italiana and BRIO Tuscan Grille, filed for bankruptcy April 11 due to the negative effects of the COVID-19 pandemic. Sales dropped from $400 million in 2017 to $307 million in 2019. The company closed 71 of its 92 U.S. locations in March and furloughed 6,000 employees.
It was also reported that California Pizza Kitchen is looking to restructure its debt to avoid bankruptcy.