Why did the Massachusetts-based pizza chain fire 1.1k employees?

A Massachusetts-based pizza chain closed 95 of its 178 locations after its parent company took on nearly $73m in debt.


November 7, 2018

Because its parent company took on tens of millions of dollars in debt. 

Sounds like a “why did the chicken cross the road?” joke, but it’s no laughing matter: Axios reports that, on Sunday, hundreds of employees of Massachusetts-based legacy pizza chain Papa Gino’s found a note taped to the door when they got to work telling them they were no longer employed — no prior notice, no severance.

Can’t choose your parents

By Monday, the pizza chain’s parent company, PGCH Holdings, announced it had filed for chapter 11 bankruptcy (after racking up almost $73m in debt it couldn’t pay back) and announced it planned to sell.

But this announcement came only after PGCH closed almost 95 of its 178 Papa Gino’s locations and terminated some 1.1k employees without notice.

The chain’s CFO, Corey Wedland, attributed the downsizing to recent minimum-wage hikes across its markets. But people aren’t buying it.

‘Extra pepperoni, hold the scapegoat’

Harris Gruman, executive director for the Service Employees International Union’s Massachusetts council, believes the minimum-wage hikes are an excuse to protect management’s numerous strategic errors. 

According to The Boston Globe, Papa Gino’s management saddled the chain with a footprint that was too large — both in number and size of its locations.

“Plenty of fast-food chains are doing well in Massachusetts, and many pizza shops are already paying as much as $15 an hour,” Gruman said.

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.