One claims it's the company's only

chance for survival.

Atari [music] has filed for Chapter 11

bankruptcy protection. The 31-year-old

presents the difference.

Kodak is filing for Chapter 11

bankruptcy protection.

What's up, guys? My name is Jake, and

welcome to the 38th episode of

Bankrupts. Of all the cheap food

restaurants across North America,

there's always been one buffet chain

that, especially through the 1980s and

'90s, existed as one of the cheapest

pizza options in town. The chain was a

trendsetter in a lot of ways, and the

company, as a result, saw a lot of

success, building out more than 650

locations with tens of thousands of

employees. But, that success wouldn't

last forever, with the chain closing

stores and ultimately filing for

bankruptcy in the 2020s. So, let's take

a look at how all of this happened. This

is CiCi's Pizza. North of Dallas, in the

suburb of Plano, Texas, lived two

friends named Mike Cole and Joe Croce.

It was 1985, and Joe Croce,

specifically, was a former accountant,

wanted to open his own restaurants. The

two of them combined their money and did

so with CiCi's Pizza, a small dine-in

pizza restaurant which made headlines in

the area for their unbeatable deals.

Basically, the restaurant was offering

unlimited pizzas and salads for a

single, very low price per person.

Almost immediately, as a result, the

restaurant was a massive hit, and even

by the end of the decade, it spawned

another location. Following the

introduction of the pizza buffet, a

concept where customers could go up and

select their own pizza slices with no

limits, the one set low cost was

honestly revolutionary for the brand.

Customers responded with enormous

enthusiasm and Cici's had become a local

casual restaurant institution. It wasn't

long before the brand name continued to

expand, not just across Dallas, but

across Texas as a whole. The actual

logistics for the restaurants were

pretty simple, too. And the two

entrepreneurs quickly incorporated the

brand under the Cici's Enterprises Inc.

name and opened the door to franchisee.

This would allow them to license out the

restaurant concept and essentially have

others flip the bill for construction.

In a very short amount of time, the

brand was expanding fast, opening up in

closed storefronts and strip malls. By

1992, the chain already had over 37

locations across Texas with very

ambitious plans to grow well beyond

those borders. Indeed, they did as by

1994, that number of locations exploded

across the American South with over 100

by the end of that year. People really

responded to the new pizza joint with

the innovative buffet concept, one which

would later feature a whole slew of

other inclusions like pastas, salads,

and desserts, all coupled with an arcade

for kids. It was so successful, in fact,

that other chains like the enormous

Pizza Hut brand had also introduced

their own buffet concept. But Cici's

still had their competitive pricing on

their side. The brand essentially

developed their own in-house

distribution company, which allowed them

to better control costs. But clearly it

was paying off as by the same year, the

company was earning around $80 million

in sales.

Stores continued to open, too, with

aggressive marketing to potential

franchise owners. Seeing the number of

stores increase to 160 in 1996, now

across 12 states. This would increase

again to 234 by 1998 and again to over

350 locations by the year 2000. It was

clear by now that Cici's had exploded in

popularity through the '90s, often

crowned as the best pizza value

anywhere. While 2001 did bring further

expansion, it also came with a price

increase. This was coupled with a brand

refresh with the introduction of a new

logo, as well as a complete remodeling

of the restaurants, which would slowly

roll out across their network. By 2003,

despite all of the immense success with

now over $336

million in revenue across 450 locations,

the company's co-founder and acting CEO,

Joe Croce, had stepped down. In a rather

unique structure for a company this big,

Joe was still the majority shareholder

of the privately owned company. So, by

him stepping down, he was actually

selling off his majority ownership of

the company. He would do this by

essentially selecting in-house buyers,

essentially selling the company to

existing key executives that were

already in the company. However, these

new executive owners were also funded

mainly through private equity with Leven

Leechman Capital Partners being the lead

firm. Oh, what a surprise. The 2000s

would prove to be another profitable

period of growth for the brand. In 2006,

they would revise another brand image

and logo while more locations continued

to open, now up to 560. They would also

unveil new pizza concepts like the mac

and cheese pizza or spinach alfredo, all

inside a very no-frills, almost

cafeteria-like dining room. But still,

the prices couldn't be beat. And while

the press equated the quality and dining

atmosphere to apparently making Pizza

Hut look like a four-star establishment,

Cici's was obviously still finding

enormous success with those looking for

cheap and easy eats. Unlike many other

restaurants during the 2008 recession,

Cici's actually saw a 5.7% increase in

sales over that time. In some ways,

analysts were seeing CiCi's as kind of

recession-proof, a very rare outlier

among all of the other casual

restaurants in the market. Even despite

another price increase and slowed

expansion plans, the chain was still

doing very well and finding customers

thanks to their continued rock-bottom

prices. In fact, the company continued

to grow, opening a to-go style

sub-brand, and by 2009, they had over

650 restaurants across America. CiCi's

was now the eighth largest pizza

restaurant chain in the world with

revenue of nearly $500 million.

With high praise from their franchisee

system, the company had continued to

expand even further. In 2012, they

announced their long-term goals to

expand their number of locations to well

over 1,100

by the year 2020. These aggressive

expansion plans, however, would never

materialize.

Instead, the chain would begin closing

locations. Since the company was

private, with their financials not

publicly disclosed, it is hard to

ascertain what exactly was going on

inside the brand. However, many of these

closures would be franchised locations.

And this was all tied with reports of

the quality of these franchisees not

being the greatest. It seemed that in an

effort to expand, the quality of both

their food and operators had taken a

hit. Another consequence of this was

their brand image, one that often had

stories of poor food quality and failed

health inspections. The few times CiCi's

did find themselves in the press, it

wasn't always good. This would

ultimately culminate in 2015 with yet

another brand refresh. This time, CiCi's

had quite the massive revitalization,

one which would change their logo into

this modern, kind of bland, abstract

pizza icon. Notably, the word pizza was

also dropped from their official name,

an effort for marketers to try and

diversify the brand image, showing that

Cici's isn't just all about pizza, even

though it kind of was. This design

aesthetic carried on into their

locations, too. The company began

rolling out these very modern and

simplified, albeit colorful, refreshes

to many of their stores. Their new

tagline was now beyond pizza, further

reinforcing that new brand image. Of

course, this was all in an effort to

modernize their entire brand and lure

back former customers and even attack a

whole other subset of people that might

not have even considered Cici's in the

first place, particularly those going to

a cheap fast food place. Despite sales

and number of locations all in decline

during this time, in 2016, Cici's was

actually acquired by the Arlon Group,

which, you probably guessed it, another

private equity group. This, of course,

was a private sale, and the purchase

price was not made public. However,

sales at the time were disclosed at

around $450 million,

and it can be inferred that the

acquisition price was at least in the

hundreds of millions. So, it's not

really a stretch to infer that the

private equity company probably took

them out with some debt. Either way,

Cici's problems lingered on. A new CEO

was then brought on, and a press

conference was held where they announced

that efforts were being made to expand

the company once again. However, just

like before, this never really

materialized. A massive data breach

certainly didn't help things, and

despite corporate direction being overly

positive with hopeful outlooks of

growth, the actual fundamentals of the

Cici's business model didn't really seem

to be working. As time went on,

franchisees sounded alarms of higher

rent and labor costs. Since the chain

was offering pizza in mass at such low

price points, many of their locations

required lots of people in the

restaurant to actually make a profit. As

soon as that began to slow down or

become unpredictable, it caused the

whole branch to lose money. These

weakened margins seem to affect much of

the brand with dozens of locations

continuing to shutter across the

country. Of course, their largest

challenge, however, was still ahead.

Following the outbreak of COVID-19,

businesses all across the country were

forced to shut their doors, basically

rethink how they did business,

especially in a world of sudden

lockdowns and safety precautions. Cici's

was a buffet restaurant business,

meaning that people had to be in person

to use their service. Not only that, but

they had to touch high-use items, which

other people would also be consuming. In

fact, the company said that more than

85% of its sales are made from on-site

dining. So, you can imagine the sudden

and dramatic change that was forced upon

them when all of this was happening.

Obviously, the high interaction of their

food and arcades were not conducive to a

healthy, sterile environment. Sales, as

a result, had plummeted. For chains like

Pizza Hut, which had already phased out

their buffet concept and also had very

robust delivery systems in place, the

damage done with the sudden shift wasn't

as bad. Cici's, however, apart from a

concept-to-go brand, didn't have

anywhere near the same delivery

infrastructure, nor did their customers

even see them as a place to pick up and

deliver pizzas. They were known more for

their quantity over quality. With

plunging revenue and customers, the

already low-margin company began to post

losses month after month. Quickly, the

brand was running out of operating

capital to pay rents, employees, and

suppliers. Ultimately, the company was

put on a death watch, and by January

2021, Cici's Holdings had filed for

Chapter 11 bankruptcy protection with

around $82 million

in debt. Well, from the outside this was

seemingly the end for the company with

some questioning whether buffet style

restaurants would even survive into the

future. It was actually a little more

positive than previously thought. The

company just prior to their bankruptcy

was already in negotiations to sell the

brand off and reorganize. A deal was

actually reached in December 2020 with

yes, another private equity firm D and G

investors. They agreed to an undisclosed

purchase price and would assume their

entire debt load and restructure it.

This Chapter 11 bankruptcy was the

result of that restructuring and not

long after they would ultimately emerge

out of it. Of course though, this came

with even more restaurant closures. In

fact, since their bankruptcy the chain

has closed another 100 locations. But,

it hasn't been all bad news for the

company. Over the last few years since

their bankruptcy, the company has been

trying to right the wrongs of the past.

Over time, the word pizza was

reintroduced back into their logo while

on the back end, CC's made major efforts

to build out a whole online delivery

system and awards program. In the

restaurants, larger arcade and game

sections were added to bolster their

family entertainment offerings. While

the fewer locations they now had allowed

for easier chain wide enhancements to be

made. Of course, not everything has gone

their way though. Prices have risen over

shorter period of time quality control

of all of their locations have been

known to be rather spotty from

restaurant to restaurant. They have also

been heavily focusing on marketing, even

creating a new mascot character called

CC Pazzini who, according to their own

extended lore, is the inventor of CC's

pizza. Okay. Regardless, the press is

now touting CC's as a comeback story

with the company even citing its own

1.1% year-over-year sales increase

through 2025. However, there's no

denying that the brand is a much smaller

operation than it had once been.

Remember, just 16 years ago, the company

had over 650 restaurants across the

country with plans to nearly double that

by 2020. Obviously, that didn't happen.

And today, CiCi's now just has 274

restaurants. No matter how you spin it,

that is a pretty dramatic fall. It

honestly shows just how dramatic things

can change in a relatively short amount

of time since the original founder's

vision was gone. I don't think it's any

coincidence that the chain began to lose

its grip when quality control and fiscal

responsibility once private equity took

over. The chain was more focused on

expansion for just the sake of growth,

as well as losing any personal touch the

chain might have had back in the 1980s.

Regardless, today it's now a much

smaller brand, but one, provided they

learn their fiscal lessons, might

actually have a bright future after all.

Thanks for watching. And if you want to

support the channel even further, you

can find me at

patreon.com/brightsunfilms

or find exclusive merchandise at

shop.brightsunfilms.com.

Until next time, my name is Jake, and

thank you very much for watching.

>> [music]