Papa’s Pizza, a former McDonald’s franchise, is going public
Papa’s, a chain that has been around for nearly 70 years, is set to file for bankruptcy protection after it failed to make profit for the first time in more than a decade.
The chain, which started as a restaurant chain in 1947 and is owned by a joint venture between Papa John’s and franchisees, said on Tuesday it was filing for Chapter 11 bankruptcy protection.
Its $2.3 billion in debt had been wiped out and it had about $1 billion in cash on hand.
The company said it planned to sell its remaining assets and pay creditors a “sophisticated” fee.
The company said the sale price was not yet disclosed.
Papa John’s Pizza Inc. (PJ: JNK) said it was going into bankruptcy protection because of a “significant financial impact” from a change in the value of its restaurant business.
Papa Johns has been struggling with declining sales and a cash crunch in recent years.
It has a $1.6 billion debt rating.
The restaurant chain, based in Omaha, Nebraska, said it had more than 100,000 employees and that it has more than $30 billion in annual revenue.
The bankruptcy filing is expected to be filed early next month, a spokeswoman said.
Pizzeria owner John Schnatter told the Omaha World-Herald that his company had struggled for years to stay afloat.
“Our business is losing ground,” Schnatter said in a statement.
“This is just the beginning.
We will continue to fight to be the best restaurant in the world.”
The chain’s bankruptcy filing comes after the bankruptcy of Burger King Corp. in a bankruptcy filing in May.
The news comes a day after the United States Department of Justice filed a lawsuit against Burger King for allegedly violating the Fair Labor Standards Act by paying workers less than the minimum wage.
The suit said that workers at the restaurant chain did not have a right to unionize under the federal law.
The federal suit comes just weeks after the Food and Drug Administration said it would issue new rules to help make it easier for fast-food workers to unionise, as the restaurant industry continues to struggle with rising costs.
More on the economy: The Dow Jones Industrial Average has surged nearly 4,500 points in after-hours trading.
Investor interest is surging as the Federal Reserve prepares to announce its next rate hike.
On Thursday, the benchmark S&P 500 index was up 0.5 percent, with the Nasdaq gaining 0.6 percent.