Upper Crust franchisees are lashing out against the pizza chain’s owners for selling thousands of discount vouchers on Groupon without their knowledge, keeping the proceeds, and then filing for bankruptcy protection.
Independently-operated Upper Crust restaurants in Newburyport, West Roxbury, and Portsmouth, N.H. said they will no longer honor the website deals because they never received money from the Boston-based pizza company to support the promotions. The franchisees are not part of the bankruptcy, and are still open after a trustee on Monday night shut down all 10 of the company-run locations across the region.
“The owners of the [Upper Crust] ran a second round of Groupon coupons without our knowledge and consent, and then willfully kept the proceeds of all of the coupons that were sold,” the owners of the West Roxbury Upper Crust wrote on the restaurant’s Facebook page Wednesday. “This has left us in a deficit of approximately $23,000 in product for Groupons that we have already redeemed. For this reason, we obviously cannot accept any more Groupons and customers with coupons can call the customer support office ... and receive a refund.”
The promotion, featured twice on Groupon in August, offered $12 vouchers that could be redeemed for $25 worth of food at specific Upper Crust locations. Franchisees were supposed to receive about $9 from corporate to help offset the costs. According to the Groupon site, Upper Crust sold more than 6,000 of the vouchers.
The gourmet pizza chain defaulted on a TD Bank loan in late September, and when it filed for Chapter 11 in early October, said it owed at least $3.4 million to creditors. Upper Crust also owes employees about $850,000 in back wages and damages for failing to obey minimum wage and overtime laws, according to court records filed recently by the Department of Labor.
Mark Tramontana, who runs the Upper Crust shops in Newburyport and Portsmouth, said the company sold more than 2,000 vouchers for his two locations, with a total value of $50,000. The money Groupon collected went to Upper Crust management, he said, but it was never passed along to his business.
“Our stores honored these vouchers for several weeks, trusting that Upper Crust would eventually send us the funds. However, they declared bankruptcy and we realized that the money paid for these vouchers was gone,” Tramontana said. “ Without any funding, we were essentially handing out $50,000 in product for free—we simply couldn’t afford to do it any more.”
A fourth independently-operated Upper Crust, in Plymouth, said it received funds for the Groupon promotion before the bankruptcy, but sold far fewer than other franchisees.
Tramontana sent a letter to customers Wednesday with a photo of his family, apologizing for the inconvenience and referring them to Groupon for a refund.
“The past few years have been extremely challenging for us. When we first opened the pizzeria, we were excited to join a local brand that was strong & growing,” he wrote. “Upper Crust was presented to us as a successful & viable business. We had no idea that these problems existed – like you, we’ve learned about them by reading the newspaper.”
Upper Crust executives, after paying themselves a month’s salary in advance, laid off about 140 workers as part of the Monday night shutdowns. The 10 corporate-owned locations will stay closed unless the company is able to quickly get a cash infusion, according to a trustee overseeing the business.