Report: MOD Pizza Considers Bankruptcy

MOD Pizza, the largest fast-food pizza chain in the United States, is considering bankruptcy, according to Bloomberg.

A spokesman said the company, which has more than 500 units nationwide, is working to improve its capital structure and is “exploring all options.” The filing could come as early as next week. The plans are not final and could change, the source told Bloomberg.

Earlier this year, MOD Pizza closed 26 restaurants in multiple states. All but one were company-owned. According to CEO Beth Scott, the closures primarily affected underperforming locations that had been struggling for some time. Employees were offered severance packages when transfers weren’t possible or were denied.

The closures spanned 10 states and Washington, D.C., with notable concentrations in California, Philadelphia, Chicago and Dallas. Despite speculation, Scott clarified that the moves were not directly related to California’s new $20 minimum wage law for fast-food workers, though the wage hike has impacted some of their shuttered locations.

MOD Pizza had planned to go public in November 2021, but ultimately did not proceed with that IPO. Among the leadership changes, Scott assumed the CEO role in early 2024, succeeding co-founder Scott Svenson, who became executive chairman.

Fast-casual pizza chains initially thrived by offering customizable pizzas, like Chipotle’s build-your-own model. But the pandemic exposed the weaknesses in their models, particularly in adapting to the digital and off-premise trends dominated by big chains like Domino’s and Pizza Hut. Other fast-casual pizza companies like Pieology, &pizza and Blaze Pizza have had to mount serious turnaround efforts to get back on track. Each concept has changed CEOs in the past three years.

“You’ve never seen fast-casual pizzerias follow the same channels of digital evolution and product evolution,” said Shawn Thompson, CEO of Pieology. Fast food“It just hasn’t changed as much as the world has, and because of some of those missteps, growth has really stagnated in this space.”

If MOD Pizza were to file for bankruptcy, it would join several entities that have filed for bankruptcy so far in 2024, including Red Lobster, Rubio’s Coastal Grill, Tijuana Flats, Sticky Fingers, Oberweis Dairy, Foxtrot and Dom’s Kitchen, a 25-unit Arby’s franchisee, a 48-unit Subway franchisee, a 17-unit Popeyes franchisee and a six-unit Alamo Drafthouse Cinemas franchisee. Corner Bakery Café filed for bankruptcy in 2023, as did major franchisees for Burger King, Wendy’s, CKE, Popeyes, Denny’s and McDonald’s.