Round Table Pizza says Las Vegas stores unaffected by bankruptcy

By Steve Green

Monday, Feb. 14, 2011 | 5 p.m.

Among the latest victims of the recession is Round Table Pizza Inc., which filed for Chapter 11 bankruptcy reorganization last week.

Its four Las Vegas-area locations are owned by a franchisee and are not affected by the bankruptcy, Round Table spokesman Jim Robertson said Monday.

Concord, Calif.-based Round Table and subsidiaries including Round Table Pizza Nevada LLC filed for bankruptcy protection in Oakland on Feb. 9 to reorganize more than $30 million in debt. In all, assets and liabilities were each estimated at between $10 million and $50 million in the initial bankruptcy filing.

The company has 128-company owned stores, some of which are unprofitable and will be closing. The company didn't immediately say which stores would close.

Round Table also has 355 franchise-owned locations, including the four in Las Vegas, and it said they will be unaffected by the bankruptcy.

In a statement announcing the bankruptcy, Round Table said the filing was necessary to improve its cash flow and stabilize its business through recapitalization of its debt and renegotiation of above-market leases.

"Our company has experienced consistent growth and management has been responsive to the difficult economic environment," CEO Rob McCourt said in a statement. "Unfortunately, we are compelled to take further steps, including this reorganization plan, to meaningfully address the high cost of our capital and above-market leases."

Round Table operates in seven western states. Besides Las Vegas, it has restaurants in Nevada in Reno and eight other towns in Northern Nevada.

Unsecured creditors listed in the initial bankruptcy filings included the Nevada Department of Taxation, owed nearly $6,000; and the Nevada Employment Security Division, owed about $5,500.

In a court filing, McCourt said Round Table grew from $16 million in revenue in 1997 to $120 million in 2006, but by 2010 sales had fallen to $112 million.

The company found it hard to cut costs during the recession.

"In 2010, the pizza market became extremely price competitive as a result of the great recession," he said. "Round Table could not materially reduce the cost of its ingredients, since it had established its reputation as 'the last honest pizza.' The lower margins during this period put additional stress on Round Table's profitability."

In February 2007, just before the recession, Round Table received a new $65 million credit facility in part to finance growth. Some $30 million is now due under that facility.

On Friday, a judge in Oakland approved routine "first day" motions for the company allowing it to use lenders' cash collateral for operations, to pay employee wages and benefits and to honor gift certificates and promotions, among other things.