UPDATE, March 24, 2020: This article has been updated with additional statements from Robert Thompson, Punch Bowl Social's CEO, and from CrowdOut, the company's lender.
- Due to the COVID-19 pandemic, Punch Bowl Social has closed all of its 19 locations and laid off substantially all of its restaurant and corporate employees, according to an SEC filing from Cracker Barrel, which previously bought a $140 million non-controlling stake in Punch Bowl.
- On March 20, a primary lender under Punch Bowl's secured credit facility declared Punch Bowl in default and stated its intentions to foreclose on its collateral interest in equity of Punch Bowl and all of its assets unless Cracker Barrel repaid or unconditionally guaranteed Punch Bowl's indebtedness. Cracker Barrel, which is concentrating resources on its core business during the crisis, will not invest further resources to prevent foreclosure or provide additional capital to Punch Bowl.
- "From the start, many thought the pairing of Punch Bowl Social and Cracker Barrel was unusual. We saw it differently — we recognized the possibilities and the opportunity to grow our brand with the support of one of the largest and most respected hospitality companies in the country," Robert Thompson, Punch Bowl Social CEO and founder, told Restaurant Dive in an emailed statement. "We find it difficult to judge the decisions made by anyone trying to survive the global COVID19 pandemic. We are all navigating new terrain and doing our best to simply survive. Punch Bowl Social is continuing to collaborate with our lender, CrowdOut, and is working now to be in a strong position for our future re-openings, nationwide."
Punch Bowl had big plans for its future and was trying to become a lifestyle brand with a hotel and potentially a cruise ship. It was planning to enter the mall space with smaller units that would have offered more games and experiential maker classes. The company was also growing at a rapid pace, reaching $128 million in run rate revenue during 2019 and had six locations in development for 2020.
Thompson remains optimistic that it can work with its lender and reopen nationwide despite the current conditions.
"We have temporarily closed our locations and significantly reduced both our staff and operations in order to re-emerge on the other side of this global pandemic," Thompson said in a press release emailed to Restaurant Dive.
Its lender, CrowdOut, also remains supportive of the company.
"Restaurants across the country are experiencing duress that has never been seen in the industry," Alexander Schoenbaum, CEO of CrowdOut, said in the press release. "Robert and his team have built an incredible brand we believe in, and we are confident in Punch Bowl Social and its team to work through these difficult and unprecedented days. We look forward to seeing Punch Bowl reopen its doors to the public as soon as it is safe and practicable."
Punch Bowl's current financial roadblocks could reveal what is in store for the future of the eatertainment space, which was one of the hottest areas of full-service dining in 2019. While many restaurants have been able to pivot toward off-premise only, eatertainment brands don't have that luxury and most didn't offer delivery since it went against their branding of providing a strong in-person experience.
Chuck E. Cheese has been trying to make delivery work after closing all of its dining rooms, however. It is offering to facilitate at-home birthday parties and offering game apps with virtual award tickets that can be redeemed in-store once locations reopen.
Others, like Punch Bowl, have had to close its stores outright. Main Event temporarily closed all of its 44 locations in March. Top Golf, which has 60 units in the U.S. and globally, has closed its U.S. and U.K. venues until further notice. Dave & Busters, which hasn’t provided any specific COVID-19 guidance, saw its stock value decline by 90% from Feb. 24 to mid-March, according to Restaurant Business. Over half of its revenue comes from games and amusements. With Punch Bowl Social facing financial collapse, this segment's future is much less certain.