Popular New England brands Papa Gino’s Pizzeria and D’Angelo Grilled Sandwiches filed for chapter 11 bankruptcy protection in November. The news came as the company shuttered about 95 underperforming restaurants “following a careful review and analysis.” One other major announcement that day was that PGHC Holdings, Inc.—the parent company of the legacy brands—said it agreed in principle to sell to private-equity firm Wynnchurch Capital before filing for bankruptcy.
On January 23, the company received approval to complete the $20 million deal. It won’t include franchisee locations and is scheduled to close by January 31.
"Wynnchurch's investment will enable us to renew our legacy as a community-focused restaurant company, bringing back menu favorites, serving great-tasting, fresh, high quality food, and delivering an outstanding customer experience," said Corey Wendland, chief financial officer of PGHC, in a statement.
There are currently 141 company-run restaurants in Massachusetts, New Hampshire, Rhode Island, and Connecticut. Wynnchurch previously replaced PGHC’s board of directors with restructuring expert Thomas Allison.
"I'm thrilled that we have a partner committed to revitalizing the brands and positioning us for future growth," added Kathy Cruz, senior vice president of Papa Gino's operations and brand services. "Together, we will be working tirelessly on delivering outstanding hospitality, improving service times and producing the best pizza in New England."
On November 4, the company closed 47 Papa Gino’s locations and 45 D’Angelo restaurants. It also said at the time of the filing that it planned to terminate the leases during the bankruptcy process. The company laid off 1,100 employees.
According to Masslive, employees didn’t see the move coming and were “outraged over the weekend when PGHC Holdings closed the locations without warning.”
At the time, PGHC said the transaction with Wynnchurch would strengthen its financial resources and allow it to remodel and modernize its corporate stores, as well as open additional units throughout New England, and enhance its online ordering capabilities across the system.
“I've been with D'Angelo for 27 years because of our focus on hospitality and relationships—guests have always been at the forefront of every decision made," Jim Croteau, senior vice president of D'Angelo Operations, said in a Wednesday statement. "I'm very excited about having an opportunity to reboot and focus the operations team on the core values that built this great New England neighborhood sandwich shop."
According to the November bankruptcy filing, PGHC declared PGHC declared between $0 and $50,000 in assets and liabilities between $50 and $100 million. The company reported $62 million in secured debt and more than $100 million overall.
Wynnchurch is a middle-market private equity investment firm with $2.2 billion of committed capital under management. PGHC said the chapter 11 proceeding would ensure that the company maintains normal business operations at all of its restaurants with improved liquidity as it pursues the sale.
The company said, following the closures, 100 Papa Gino’s restaurants and 78 D’Angelo Grilled Sandwiches would remain and operate as normal. Papa Gino’s had 155 stores at the end of 2016. D’Angelo grew to as many as 139 locations at the end of 2017.
In regards to what led to the downturn, Wendland credited, according to the filing, a shift from dine-in to delivery and carryout. The trend stressed cash flow and resulted in the need to remodel some stores and close others. Rising wages and higher health insurance costs also stressed the company’s profit model. Additionally, the company struggled to compete with the value-driven price drop brought on by larger, national competitors.
Papa Gino’s Pizzeria was founded in 1961 and expanded from a single East Boston location to restaurants in Massachusetts, Rhode Island, New Hampshire, and Connecticut. It is the official pizza of the New England Patriots of the NFL, and the New England Revolution of Major League Soccer.
D’Angelo Grilled Sandwiches can trace its roots back to 1967 in Dedham, Massachusetts. Originally called Ma Riva’s Sub Shop, the brand changed its name in the 1970s and expanded its menu.