Struggling restaurant chain delisted, avoids Chapter 11 bankruptcy | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The restaurant industry has faced its share of financial distress over the past five years.

During the pandemic, restaurants were forced to close to customers. And at the time, some successfully shifted to takeout and delivery.

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But for establishments that thrived on the in-person dining experience, those temporary shutdowns were brutal. And many beloved restaurants did not manage to survive the events of 2020.

Even restaurants that held on well into 2021 and beyond haven’t necessarily fared well. Rampant inflation and tight margins have battered restaurants, eating into profits.

Shifting consumer habits also haven’t helped.

Americans have curbed their spending to compensate for higher living costs. For many, that’s meant reducing restaurant spending, especially at a time when the cost of food away from home is up 3.4% year over year, compared to just 1.9% for groceries.

Consumers have also flip-flopped between ordering restaurant food and actually sitting down to eat.

In 2023, 57% of Americans said they preferred ordering takeout or delivery to dining in person. By 2024, 55% of consumers were showing a preference for in-person dining.

But even so, restaurants without a strong takeout and delivery model have found themselves in a tough spot. And a good number of restaurants across the board have filed for bankruptcy.

One popular chain seemed to be headed toward bankruptcy but has managed to stave it off with a clutch round of funding. But it’s unclear as to what happens next.

Restaurant chain avoids bankruptcy but gets stock delisted.

Pinstripes gets delisted but stays alive

Pinstripes Holdings, which operates the popular Pinstripes chain, is being delisted from the New York Stock Exchange roughly one year after the company went public. Known for its bistro, bowling, and bocce combination, Pinstripes got delisted when it failed to sustain a market capitalization of $15 million for 30 straight days.

The company announced its delisting in conjunction with a $7.5 million loan from Oaktree Capital Management. This round of funding will allow Pinstripes to continue operations and avoid a Chapter 11 bankruptcy.

Oaktree had already been a lender of Pinstripes, and will now become the majority equity holder. A new board of directors will be elected, and existing shareholders will retain their financial interests in the company.

As of Jan. 5, Pinstripes had $85 million in long-term debt and almost $99 million of operating lease liabilities.

Dale Schwartz, founder and CEO of Pinstripes, said the deal with Oaktree would “strengthen our balance sheet and enhance our financial flexibility for the benefit of the Company and its key stakeholders – investors, customers, vendors, and team members.”

The Pinstripes model may not be sustainable

The fact that Pinstripes got a financial lifeline and avoided bankruptcy is good news for investors and fans of the brand alike – but only to a point.

Pinstripes found itself bleeding money during much of 2024, prompting layoffs and other cuts to curb costs. The chain lost $8.1 million during its most recent fiscal quarter.

Pinstripes also isn’t the only restaurant sector company that’s been in a slump. Noodles & Company flirted with a potential delisting but avoided it by revamping its brand and overhauling its menu.

But at a time when consumers are being careful with their spending and aren’t overwhelmingly drawn to the in-person dining experience, it’s questionable as to whether this new round of funding for Pinstripes will do the trick in keeping it afloat long term.

More bankruptcy:

Other restaurant chains that have come close to Chapter 11 filings or emerged from them have taken steps to draw in customers by changing their menus and revisiting their reward programs. So far, Pinstripes has not announced similar plans, though with a new board of directors at the helm, a shake-up could be coming.

Ultimately, though, Pinstripes has a tough road ahead as an eatertainment hub that can’t easily shift to a delivery- and takeout-focused model. And with broad economic concerns abounding in the wake of tariff policies, it’s not a given that Pinstripes will get the foot traffic it needs in the coming months to remain in business.