At last, fast-casual’s war on full-service restaurant chains has come for Bertucci’s.
After years of declining sales, the Northborough-based chain announced Monday it was closing 15 locations upon filing for Chapter 11 bankruptcy over the weekend, with potentially more closures to come. But that doesn’t mean the Italian restaurant chain is completely going away, as company executives frame the move as an opportunity to “return to Bertucci’s roots.”
How did they get to this point?
Bertucci’s began as a humble brick-oven pizza shop in Somerville’s Davis Square in the 1980s. By the 1990s, the company had ballooned to more than 100 locations up and down the East Coast and as far west as Chicago.
However, the recent rise of fast-casual restaurants, like Panera and Chipotle, made that growth unsustainable amid an increasingly competitive environment, even as CEO Brian Wright pledged he would not let the other restaurants “muscle out” Bertucci’s, which proved to be fateful.
“Consumers have more options than ever for spending discretionary income, and their preferences continue to shift towards cheaper, faster alternatives,” the company wrote in papers filed Sunday in bankruptcy court. “Since 2011, Bertucci’s has experienced a year-over-year decline in sales and revenue.”
The company had tried to fight the trend by introducing contemporary specialty menus, a mobile app, and broad cost-cutting initiatives. However, according to Sunday’s filing, Bertucci’s owed nearly $120 million in debt obligations. Following a “rigorous evaluation,” the company said it decided Chapter 11 bankruptcy was the best option.
According to court filings, a Chicago-based investment firm has agreed to buy Bertucci’s in an auction out of bankruptcy court. Eric Mara, the founder of Right Lane Capitol, told Bloomberg that his company plans to buy the chain at the opening bid of $19.7 million, assuming no higher bids come in.
“We have a plan to quickly emerge from this restructuring that will strengthen our position in the market, and we look forward to future investment in the brand,” Tom Smith, a spokesman for Bertucci’s, told Boston.com in a statement Tuesday.
But what does this all mean for customers?
The company says the process should be “seamless for Bertucci’s guests, trading partners and vendors, and result in minimal disruption to its operations.” But as it announced its bankruptcy Monday, the company also said it would be closing 15 locations, including six of its 35 Massachusetts restaurants.
According to MassLive, the six locations closing in the company’s home state are in Amherst, Longmeadow, Randolph, Taunton, Wayland, and West Springfield (a barstool with a plaque in memory of a loyal customer who was fatally stabbed at the Taunton location in 2016 has reportedly been given to the deceased man’s widow).
The chain also closed the two locations of its sister brand, 2ovens, in Shrewsbury.
Outside of its home state, the closures also hit three Connecticut locations (Manchester, Orange, and Southington), four Pennsylvania locations (Aubdobon, Bryn Mawr, Montgomeryville, and Warrington), and one location in Hauppauge, New York.
In court papers, the company said that Right Lane plans to offer jobs to “substantially all” of Bertucci’s 4,215 employees upon the closing of the sale. For employees at the closed locations, the company says it will help them “transfer to other Bertucci’s or help [secure] new jobs locally.”
1/ Today, we announced a restructuring to strengthen our company long-term, though it will have an immediate impact with the closing of 15 locations. We will help our affected team members thru transfers to other Bertucci’s or help securing new jobs locally.
— Bertucci's (@Bertuccis) April 16, 2018
However, there still could be more closures to come. In its filings, Bertucci’s said it had identified 29 “unprofitable leases,” which it intended to reject. Smith said those 29 leases included the 15 locations that closed this week.
Despite the changes, Bertucci’s leadership is staying the same. Wright is staying on as CEO, a position he took in 2016.
Wright said Monday that the company is “looking forward to focusing on a return to Bertucci’s roots: authentic, high quality, fresh ingredients that guests and team members alike crave and care about.”
The former Au Bon Pain executive’s words appear to be consistent with his recent strategy for warding off the industry-wide encroachment of fast-casual restaurants. According to Nation’s Restaurant News, fast-casual restaurants increased by another 4 percent in 2017, while full-service restaurants, including casual-dining spots like Bertucci’s, declined 2 percent.
Wright’s strategy in the face of the popularity of fast-casual restaurants has emphasized two themes: speed and ingredients.
In a letter last November, the CEO talked about how he had rehired Bertucci’s “original chef” Rosario Del Nero to help strengthen the “scratch-kitchen approach” at the chain, which The Boston Globe caught mislabeling fish in 2011. Wright said he and De Nero “painstakingly” reviewed each menu item and how it was delivered. The Globe reported that they cut the menu by about 30 percent.
“We knew, we could do better,” the CEO wrote last fall.
Wright has said the chain needs to have “everyday value” — in other words, speed and convenience. Bertucci’s recently introduced a 15-minutes-or-less “Express Lunch” deal and mobile app to make the sit-down chain a more appealing regular option for people on a fast-pace schedule. Smith noted that the app also includes a “Pay-at-the-Table” function, so customers don’t necessarily have to wait around for the check.
“You can see the Paneras of the world, who have done a phenomenal job in how they get people in and out,” Wright told the Globe last fall. “I think we can start to give them a run for their money.”
According to Smith, the company plans to launch a new lunch menu in May focusing on salads and sandwiches served on a variety of homemade bread, piadas, and wraps. But the lunch menu will also still include Bertucci’s staples, on which the chain is doubling down. Smith said the company was committed to providing value in those signature Italian dishes, like Bertucci’s pasta and brick-oven pizza.
“One thing that will not change is our famous rolls,” he added.