Send me real-time posts from this site at my email

Punch Bowl Social Facing Foreclosure as Cracker Barrel Gives Up on the Concept

For Denver-based restaurant concept Punch Bowl Social, the economic shutdown caused by the COVID-19 pandemic may be too much to handle. After the restaurant closed all locations and laid off its workers, creditors provided notice to parent company PBS Holdco declaring a default on its credit facility. Cracker Barrel (NASDAQ: CBRL) owns 58.6% of PBS Holdco.

PBS Holdco's creditors asked that Cracker Barrel pay what was due and guarantee future repayment of debt. However, in an SEC filing from March 25, Cracker Barrel stated it's walking away from its Punch Bowl Social investment, leaving it with a bleak outlook.

Image source: Cracker Barrel.

Ending the experiment

Punch Bowl Social was designed to be an experience restaurant brand -- one with made-from-scratch food but also social games. In July 2019, Cracker Barrel announced it was spending up to $140 million to acquire a non-controlling stake in the concept, hoping that it would provide a vehicle to expand into different markets and demographics. However, less than a year later, the experiment has ended.

It's a grim reminder of the challenges facing restaurant companies right now, as the coronavirus outbreak has virtually eliminated all dine-in restaurant traffic. All Cracker Barrel locations remain open with pickup and delivery options. But a major part of its business is its store merchandise, which likely isn't seeing much e-commerce sales volume at the moment. No doubt, the company will struggle until its doors can fully reopen. In light of these tough times, Cracker Barrel has suspended its dividend, suspended share repurchases, and borrowed the remaining $490 million on its existing credit facility.

Cracker Barrel expects to record a whopping $133 million impairment charge in the coming quarter resulting from its Punch Bowl Social exit.

10 stocks we like better than Cracker Barrel Old Country Store
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Cracker Barrel Old Country Store wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 18, 2020

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome!!! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue