Mod Pizza, the fast-casual restaurant chain, was on the brink of bankruptcy this week but has been acquired by Los Angeles-based Elite Restaurant Group, the company announced.
Prior to the deal announcement, a Mod spokesman said the pizza chain was “actively working toward strategic alternatives to avoid filing for Chapter 11 bankruptcy.”
Mod Pizza, which was founded in Seattle in 2008, has more than 40 locations in California and 500 across the U.S. Mod, which offers “fully customizable” pizzas, helped popularize the trend of allowing customers to choose toppings and sauces on individually sized pizzas. It is unclear whether any restaurants will close as a result of the merger.
“Mod is a beloved brand with a loyal fan base,” Beth Scott, the chain’s chief executive officer, said in a statement. “We’re excited to work with Elite Restaurant Group to strengthen Mod’s future.”
Elite Restaurant Group has also acquired other struggling restaurant chains, including Patxie’s Pizza, Daphne’s California Greek, and burger chain Slater’s 50/50 in its portfolio.
Jim Salera, a restaurant industry analyst at Stevens, said California’s recently enacted $20 hourly minimum wage for fast-food workers is likely raising wages across the board, not just for minimum wage workers. The minimum wage hike could set off a knock-on effect that could significantly increase restaurant labor costs, he said.
But Salera said declining customer demand is putting more pressure on the restaurant industry than any other factor.
“Consumers, particularly lower-income consumers, are facing significant economic headwinds,” he said. “They have to make decisions about how to allocate their budgets and they’re trying to save.”
Mod Pizza’s sale comes after two popular restaurant chains, Red Lobster and Rubio’s Coastal Grill, filed for bankruptcy, citing declining business and rising labor costs.