MOD Pizza Acquired by Elite Restaurant Group To Prevent Bankruptcy

Several months following the closure of underperforming locations, MOD Pizza has finalized a transaction aimed at steering clear of bankruptcy, a step the chain was reportedly hesitant about.

On Wednesday, the fast-casual chain known for its customizable pizzas announced Elite Restaurant Group as its new owner.

Following recent reports indicating the pizza chain was contemplating bankruptcy last week, a spokesperson for the company has now confirmed that the company is implementing a turnaround strategy.

At the time, Rick Van Warner, the MOD spokesperson, said, “We’re working diligently to improve our capital structure and are exploring all options to do so.”

During a challenging environment for fast-casual dining chains, MOD Pizza is strategizing to navigate economic pressures that have made consumers more cautious about spending on dining out. The industry landscape reflects these concerns, as seen with Red Lobster’s recent Chapter 11 bankruptcy filing in May. The seafood chain reported overwhelming debts exceeding $1 billion and a cash shortfall of less than $30 million, highlighting broader financial uncertainties impacting the restaurant sector.

To tackle the hurdles, this year, MOD Pizza has implemented leadership changes to strengthen its operations. In January, Beth Scott took over as CEO, succeeding co-founder Scott Svenson. Scott brings extensive restaurant industry experience, having previously held positions at Cooper’s Hawk and Fleming’s. Jennifer Anderson also joined as the chief marketing officer, transitioning from her role as CMO at Raising Cane’s Chicken Fingers. These appointments signify MOD Pizza’s commitment to solidifying its management team during shifting market conditions.

In a statement, Michael Nakhleh, president and owner of Elite Restaurant Group, said, “MOD has an outstanding culture and passionate, loyal guests and employees. We recognize the inherent value this represents and look forward to helping MOD write the next chapter in its history.”

Earlier this year, the chain closed down underperforming stores and provided relocation assistance to employees.

In a statement emailed to Restaurant Dive in April, the company said, “We have occasionally closed units that are unprofitable, which is the normal course of business for any company our size.”

Prior to its recent challenges, MOD had enjoyed significant success. Back in 2019, the company secured a $160 million equity financing boost led by Clayton, Dubilier & Rice, which marked a turning point aimed at expanding to 1,000 locations within five years. However, this ambitious target was never met, with the chain falling short of reaching even 600 units. A few years later in 2021, MOD made efforts toward an initial public offering (IPO), filing a private draft registration with the U.S. Securities and Exchange Commission (SEC), however, the IPO plans ultimately did not come to fruition.

Fast-forward a couple of years, and the company reported a net profit of $4.2 million in 2023, showing a slight decline of approximately 6% from nearly $4.5 million in 2022, according to the 2024 franchise disclosure document filed in Wisconsin. The chain runs mostly through company-owned outlets, with 465 locations operational and 87 franchised units by the end of 2023. Texas, with more than 100 locations, stands as its largest market.