‘The Demise Of Hospitality’ – Major Pizza Chain At Risk Of Bankruptcy Shows Worrying Trend

This could spell trouble for the 500-plus Mod locations spread across the U.S. Stay tuned, because every one of them could be affected.

Insiders hint that “plans are not finalized and could still change.” It’s a nail-biter as the company teeters between major financial restructuring or possibly having to shut down altogether.

At the most recent quarterly earnings, bosses at the company had already admitted that they had shut 26 restaurants throughout the first three months of this year. Rising prices and a lack of customers quickly took its toll on the business.

The chain’s struggle reflects a broader trend of financial pressures mounting within the restaurant industry.

They’ve since spread their wings to over 500 locations across 28 states, becoming a major player in the fast-casual dining game. 

This is a key battleground for the chain, especially now as they navigate these financial difficulties.

Home state Washington boasts 72 locations, Oregon has 32, and California supports 46. These key areas are crucial to Mod’s strategy and success in the American market.

Further showing ambition, the chain filed for an initial public offering in 2021, aiming to solidify its slice of the market.

In system sales this year, Mod Pizza earned $700 million in system sales last year. Instead, the new CEO who was appointed in January, Beth Scott (replacing Scott Svenson), closed 26 underperforming locations in April and have shut down even more since.

Before the closures, Mod Pizza was one of the fastest-growing chains in the entire country, only to be met with closures and potential bankruptcy by 2024. The restaurant also had much bigger plans than mere growth.

There were plans for the pizza chain to grow to the point of having 1000 branches across the country within five years, according to Restaurant Business. The fact that 2024 is that fifth year, it is enough to leave a bitter taste in anyone’s mouth.

This industry-wide trend spells trouble not just for Mod but for many in the fast-food arena.

Giants like Applebee’s and TGI Fridays, along with smaller chains like BurgerFi, have had to close locations. Economic pressures and changing dining habits are hitting everyone hard.

This massive shutdown signals deep troubles within the seafood dining sector, mirroring challenges across the industry.

The coastal grill has shut down dozens of California locations, 48 locations in California closed down, including 13 in San Diego alone, the grill’s birthplace. A Rubio’s spokesperson said: “While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come.”

This significant increase is part of larger economic shifts that are testing the survival of many restaurant operations.

Often seen as employment activism, Mod makes a conscious effort to open the door to people who are commonly not given a chance. The MOD Squad team is made up of people who often face employment barriers such as the previously incarcerated and those with developmental, intellectual, or physical disabilities.

Mod also engage in animal ethics, fair labor policies, and environmental projects. Community-based fundraising projects have included child hunger, mental health awareness, and suicide prevention.

A broader conflict threatens a further 129 locations across Illinois, Georgia, South Carolina, and Wisconsin, illustrating the fragile nature of the franchise model.

Dennis Gemberling, founder and principal of hospitality industry consultancy group, Perry Group International, said customers are gravitating more towards either “grab and go” food or full dinners, leaving fast-casual restaurants like Mod behind.

Consumers want either the full wine-and-dine experience or to just have their food brought to their front door. Gemberling said that full-service restaurants are becoming “more of a specialty operation to go to for the after-work crowd, or on holidays and that type of thing.”

An anonymous insider of the company told the New York Post that the situation is fluid and plans could change. While optimism is admirable, looking at the general trend of restaurant chains in recent years, the situation looks dire. Despite its customizability and fast turnover, Mod just is not making ends meet.

“We have a brand guests love, a passionate team and a solid turnaround plan underway that is making progress,” they told Restaurant Business. “Since this is an ongoing process, it would be inappropriate to speculate on the outcome.”

Gemberling said: “I call it the demise of hospitality where everybody wants grab and go delivery. The whole market is starting to dwindle. Gone are the days of the Martini lunch.”