Pinstripes, a once-rising eatertainment concept, declared bankruptcy, citing “economic deterioration” that sank revenue and left it with no other options for restructuring, according to court documents.
Pinstripes and its largest creditor, Silverview, agreed to a sales process to preserve restaurant locations and save nearly 900 jobs. The lender is the stalking horse bidder with a $15 million credit bid, along with about $1.6 million in cash to assume certain obligations and liabilities. Silverview is also providing $3.8 million in debtor-in-possession financing to ensure continued operations.
Chief restructuring officer James Katchadurian said the bankruptcy was almost a year in the making and is the only remaining path to maximizing value. The company entered bankruptcy with about $143 million in secured debt.
Founded in 2007 and going public in December 2023, Pinstripes grew to as many as 18 locations, offering 26,000 to 38,000 square feet of interior space, featuring bowling alleys and additional outdoor space for dining, bocce courts, fire-pits, and decorative fountains. Venues can hold 900 guests at a time, including 300 for dining. Eighty percent of revenue comes from food while 20 percent comes from games, resulting in annual revenue of $129 million in the fiscal year ended April 27. The chain’s AUVs are around $7.4 million.
Pinstripes is now down to eight operating locations after several closures and was delisted from the New York Stock Exchange in March due to financial stress. It blamed the bankruptcy on inflationary pressures felt by consumers and higher labor and commodity costs that “drastically and negatively affected their performance,” according to Katchadurian.
“Like many other similarly situated restaurant and entertainment businesses, the Debtors’ performance is acutely impacted by consumer preferences,” the chief restructuring officer said in court documents. “As inflationary pressures have made consumers increasingly cost-conscious, preferences for out of home experiences began to shift to more cost-efficient alternatives. As a result, the Debtors began facing an increasingly tight liquidity crunch at the same time that they most needed cash reserves to adapt to industry-wide changes.”
The brand was partially able to offset rising costs with menu price increases and more effective purchasing practices, but inflation and lower customer traffic still put a strain on its business and liquidity needs. At the same time, Pinstripes kept expanding and racking up costs for new store openings that weren’t generating revenue. Because of this, the chain wasn’t earning enough revenue and EBITDA to cover its debt service, working capital, and capital expenditures, resulting in default notices from lenders. Pinstripes proceeded to enter forbearance agreements with its respective creditors.
After entering forbearance, the board of directors appointed an independent committee to make recommendations on what to do next, including a potential refinancing, sale of the company, a recapitalization with one or more of the company’s existing lenders, or other strategic alternatives. The committee’s sales and recapitalization efforts toward the beginning of the year did not yield any worthwhile results.
The company asked for a sale hearing to be held in 45 days. Silverview is in position to acquire the business unless higher bids emerge.
“This proposed timeline ensures sufficient time to effectuate a value-maximizing transaction while avoiding the value destruction of a free-fall chapter 7,” Katchadurian said.
