Dive Brief:
- Pinstripes’ CFO Tony Querciagrossa is leaving the company at the end of February, the brand announced in its Q3 fiscal year 2025 earnings report earlier this week.
- The company is searching for a permanent successor, though Querciagrossa will continue to assist Pinstripes “as need be for a period thereafter,” to ensure a smooth transition.
- The bowling eatertainment company saw its same-store sales fall 7.7% in Q3, a severe contraction for the firm, which is now exploring strategic alternatives according to its most recent 10-Q.
Dive Insight:
Fiscal Q3 was the third consecutive same-store sales decrease, and a strong December concealed the weakness of the chain’s sales at other points, Peter Saleh, an analyst for BTIG, wrote in a report emailed to Restaurant Dive.
“In the first two months of the quarter (roughly October and November), comps declined mid-teens, before rebounding to positive mid-single digits in December,” Saleh said.
While Pinstripes has a high average-unit volume, the eatertainment firm has not been able to translate that into rapid growth. Ahead of its IPO, the company said it was eventually targeting 150 units, and had 14 at the time. Over a year later, Pinstripes has managed to hit 18 total units.
CEO Dale Schwartz told analysts on the brand’s most recent earnings call that Pinstripes planned to open a unit in Coral Gables in Q4 FY2025 and “we still plan on opening Jacksonville later this calendar year,” but that further information on future openings would come after the chain completes some financing.
“The company has $114 [million] in debt, is in breach of its covenants and is dependent on additional funding ($6 [million] raised postquarter) for any further openings,” Saleh noted. That additional funding came from Oak Tree Fund Administration, but the brand has broken its covenant with Oak Tree on a previous round of financing.
The breach of the material indebtedness was caused by a failure to maintain a required total net leverage ratio, according to the earnings statement. The chain has managed to amend its loan agreement with Oak Tree Fund Administration and is now “required to achieve certain milestones in respect of various possible strategic alternatives,” according to the 10-Q.
Pinstripes’ current projections “raise substantial doubt on the Company’s ability to continue as a going concern and the Company’s ability to meet its current obligations, including for capital expenditures, lease obligations and continued operations,” according to the earnings release.
Schwartz said the chain’s efforts to control corporate costs, including through layoffs, have been successful and that selling and general and administrative costs fell by $500,000 quarter over quarter.
“These cost savings range from negotiations with agency partners to strategic corporate headcount reduction and a renewed focus on marketing efficiency,” Schwartz said.
Despite the sales challenges, the company saw $2.7 million in corporate profits in Q3, its best quarter for that metric in two years.
