Round Table Pizza is expected to emerge from bankruptcy this month following approval of a reorganization plan that leaves the full-service pizza chain in the hands of its employees.
Concord, Calif.-based Round Table Pizza, which has been 100-percent employee owned for more than two decades, filed Chapter 11 in February, saying the recession left the company unable to meet or renegotiate terms on a 2007 credit facility.
Late last week, however, a bankruptcy judge in Northern California approved a reorganization plan that will allow the chain to exit Chapter 11, maintaining ownership under the existing employee stock ownership plan trust. The official exit from bankruptcy will likely occur before Christmas, company officials said.
Under the reorganization plan, the company agreed to pay GE Capital Corp., as agent for secured lenders, approximately $37 million at 9 percent interest by July 2013. At that point, the company plans to seek a new credit facility.
Jim Robertson, Round Table’s vice president of franchising services, said the company also has closed 22 underperforming locations since the bankruptcy filing.
Founded in 1959, Round Table was a growing pizza brand in the West, with 470 locations in seven states when it filed for bankruptcy this year. At the time, the company operated 115 units and the rest were franchised or licensed.
Known for its tagline “The Last Honest Pizza,” Round Table’s revenues had grown from about $15 million in 1997 to $120 million in 2006, prior to the recession, according to court filings.
In 2007, the company took on a $65 million credit facility from GE Capital, with plans to expand.
The recession, however, took its toll and Robertson said, “We found ourselves with leases that didn’t match the economic reality.”
In 2010, the company put itself up for sale, but did not find the right buyer. By February this year, officials decided the most prudent course of action was Chapter 11.
In a statement issued in February, company officials said the bankruptcy filing was necessary to improve cash flow and stabilize the business through recapitalization of debt and renegotiation of leases.
That plan, Robertson said, has paid off.
Round Table’s company-owned stores have seen seven consecutive months of sales increases, he said, and systemwide, sales are up 0.7 percent over the past three months.
Domestically, Round Table expects to see 10 new franchised locations open in 2012, Robertson said.
Meanwhile, Round Table sees an opportunity to grow its brand overseas.
Round Table in August announced an agreement to bring the brand to Vietnam. The Mesa Group agreed to develop 20 Round Table restaurants throughout the country, with the first scheduled to open in Ho Chi Minh City in March 2012.
The chain currently has seven locations in Dubai, and the company is seeking partners to take the brand to other parts of Asia and South America.