Le Pain Quotidien to close two-thirds of its U.S. bakeries in bankruptcy deal

Count Le Pain Quotidien among the raft of restaurants struggling to survive the coronavirus, with the bakery chain's European owner seeking to withdraw from the U.S.

Under the Belgium-based company's restructuring plan, the Le Pain would sell its 98 U.S. locations to a New York City company, with 35 stores set to remain open. The U.S. operation, PQ New York, filed for Chapter 11 bankruptcy in Delaware this week, citing the impact of shutdowns around the country. 

"The government closures mostly affected dine-in food service in an effort to promote social distancing and combat the spread of COVID-19, while permitting the continuation of takeout and delivery food services," Le Pain Quotidien's chief restructuring officer, Steven Fleming, said in court documents. 

The company, which has 2,500 employees in the U.S., temporarily closed 93 of its locations in mid-March. Those stores remain closed— and two-thirds of them may never reopen, according to reorganization plans for Le Pain Quotidean described in the bankruptcy filing.

Le Pain Quotidien hopes to sell its U.S. stores to Aurify Brands, which owns other restaurants including franchises like Five Guys Burgers and Fries and Fields Good Chicken. Court documents show that Aurify would reopen at least 35 Le Pain stores and rehire some workers at those locations. A bankruptcy judge must approve the sale. 

Le Pain Quotidien's U.S. business began shrinking last year, as its losses mounted and sales dropped to $153 million from $175 million in 2018, its bankruptcy filing shows. Earnings fell amid declining customer traffic, rising rents and fierce competition in key markets like New York City. The chain was also slow to pivot to new technologies like mobile ordering. 

While the company focused on its sit-down restaurants, "Consumers had gravitated more towards the grab-and-go concept, which provided for quicker transactions by using a simplified menu and a greater level of self-service," Fleming said.

The pandemic has hurt restaurants nationwide, many of which had to close or convert to take-out only. The industry lost an estimated $25 billion in sales and 3 million jobs in the first three weeks of March. Traffic at sit-down restaurants in major cities has also plummeted.