Happy Joe’s Pizza files for Chapter 11 bankruptcy
BETTENDORF, Iowa (KWQC) - Bettendorf-based restaurant chain Happy Joe’s Pizza filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Delaware.
Dynamic Restaurant Acquisition, Inc. filed the petition, doing business as Happy Joe’s Pizza on Sept. 2. Thomas A. Sacco, president and CEO of Dynamic Restaurant Acquisition, Inc., signed the petition.
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganization is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.
The same day the petition was filed, Sacco said in a media release that he filed a plan of reorganization on two of the four corporate entities.
The first is the entity that operates Happy Joe’s company restaurants, while the second operates Tony Sacco’s company restaurants.
Both entities only operate company-owned restaurants and are not associated with any franchisee restaurants. The two franchising entities – Happy Joe’s Franchising and Tony Sacco’s Franchising – were not part of the filing, according to the release.
Tom Sacco and Tony Sacco are not related, according to the release.
According to the release, Tom Sacco was recruited to become Happy Joe’s chief executive officer in October 2020 “not only to modernize the 50-year-old Midwestern brand, but to restructure, revitalize and refresh the proven business model for future success heading into its second 50-year run.”
“When I arrived at Happy Joe’s, I figured out really quick where the problems were. With COVID wreaking havoc on our industry, expensive sale-leasebacks of company-owned restaurants taking place just prior to my arrival, a significant increase in food costs exacerbated by supply chain issues, and an ever more difficult labor market, our challenges kept increasing exponentially,” Sacco said in the release. “While nobody wants to put a company through a restructuring, it was the right thing to do for the long-term health and continued growth of the iconic Happy Joe’s brand.”
“We simply should not continue to deplete our strong flow of franchise revenue to cover losses from a couple of underperforming company restaurants. The company stores need to stand on their own. The good news is that we are reinvigorating the Happy Joe’s brand, remodeling older restaurants, opening highly successful new franchise locations and entering new markets in Florida, Texas and Arizona – along with our international expansion into Egypt and throughout the Middle East. All of this is contributing to a stronger and healthier business model that will be significantly more profitable going forward.”
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