Expert Data Analysis of Buca di Beppo Bankruptcy Filing

Earlier this week, Buca di Beppo filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, 

"This is a strategic step towards a strong future for Buca di Beppo," said Rich Saultz, President, in a statement. "While the restaurant industry has faced significant challenges, this move is the best next step for our brand. By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future."

Buca di Beppo is restructuring 44 core locations and is in process of opening one new location.

Ragini Bhalla, Head of Brand and Spokesperson at Creditsafe, conducted full financial data breakdown and analysis. Bhalla has more than  17 years of experience in content and communications, predominantly within the B2B sector.  Here are some significant data insights she shared with Modern Restaurant Management (MRM) magazine.

Buca has struggled with paying suppliers on time.

As Creditsafe data reveals, late payments were more of the rule than the exception for the restaurant chain.

"When we look at their payment behaviors from January to May 2024, we could see that roughly 23 to 40 percent of its bills were 91+ days late. And the number of late payments (1-30 days) jumped from 11.17 percent in June 2024 to 50 percent in July 2024. When late payments are such a common occurrence in a company and over a prolonged period (12+ months), it’s usually an indicator of cash flow problems, which are often exacerbated by high debt, increasing expenses and declining sales."

DBT rose significantly in the past year and has consistently been higher than the industry average.

According to Creditsafe data, In September 2023, Buca’s DBT was 19. But then its DBT spiked to 31 in October 2023 and continued to rise over the next three months until it reached 43 in January 2024. Since then, it has remained high and hovered between 41 and 45.

"To put this into context, the industry average DBT has been much lower over the last 12 months – ranging between 15 and 19," Bhalla said. "As of July 2024, the company’s DBT was 43 – meaning Buca typically paid its suppliers 43 days late. For smaller and mid-sized suppliers, this was likely putting a lot of pressure on their own cash flows and could have led to suppliers no longer being so flexible with payment terms."

Buca’s bankruptcy filing this week isn’t all that surprising when you look at its financials.

Buca officially filed for bankruptcy on August 5, 2024, citing its desire to optimize operations and reposition the brand for future success. Earlier in July, the restaurant chain closed 13 of its locations – leaving 44 locations in the US.

"The restaurant chain’s bankruptcy isn’t all that surprising when you look at the state of its financials over the last 12 months. The company reported between $10 million and $50 million in both assets and liabilities at the time of its filing. And according to data from Technomic, sales declined 4.7 percent last year and have fallen about 14 percent since 2021, according to the filing. Over the first five months of 2024, net revenue was $74.8 million, which was 10 percent lower than the same period a year ago. High debt, rising labor costs and high food costs were high on the list of factors that led to Buca’s bankruptcy. When these challenges arise, you can see it happening in a company’s payment behaviors. And that’s exactly what we’ve seen in our data for the company – their DBT increased drastically and was higher than the industry average for the last 12 months."

Bhalla added that another factor that could have contributed to its financial demise is the shift in consumer preferences for Italian food. For a long time, Italian was the most popular type of cuisine in the US. But that’s no longer the case. In 2023, Axios reported that Latin American and Tex-Mex are now the most popular cuisines across the country, with Asian cuisine not too far behind.