Vegan restaurant chain By Chloe, which wanted to become the McDonald's of vegan fast food, files for bankruptcy

• Popular vegan restaurant chain By Chloe is filing for bankruptcy, as the coronavirus pandemic led to a drop in revenue and reduction of staff.
• The chain has 14 locations in the US, along with two international spots.
• By Chloe will seek to sell itself, and was loaned $3.25 million by investors to fund the process, according to The Wall Street Journal.
• As part of the proceedings, Jimmy Haber stepped down from the board and his role as interim CEO, with Catey Mark Meyers replacing him as interim chief executive.

Popular vegan restaurant chain By Chloe is filing for bankruptcy.

According to The Wall Street Journal, BC Hospitality Group Inc., parent company for the chain, filed for chapter 11 bankruptcy protection this week and is exploring a sale.

Investors put up a $3.25 million loan in the meantime to fund the process, and even with the bankruptcy filing, By Chloe is still planning on expanding to southern California and the Middle East with two new locations by 2021, the Journal reports.

"The COVID-19 pandemic hit all sectors of the restaurant industry especially hard, including the fast casual category. In the face of remarkably challenging conditions to operate in, we believe that a complete reorganization of the company is necessary for by CHLOE. to emerge and thrive long-term," Catey Mark Meyers, who is serving as interim CEO of the brand, said in a statement. "While we are working to retool the brand's operations, the by CHLOE. experience remains intact and our immediate priority is to continue to serve our loyal guests and preserve the jobs of our valuable restaurant team."

The brain child of Chloe Coscarelli and Samantha Wasser, By Chloe wanted to be the McDonald's of vegan fast food, Business Insider previously reported. All menu items are under $12, and the brand is very "Instagrammable." The first location opened in New York in 2015, and currently there are 14 locations in the US along with two international spots, according to Bloomberg.

By 2016, the brand was grossing $10 million in annual sales. It raised a total of $31 million from investors including RiverPark Ventures, Collaborative Fund, and Lion Capital, according to PitchBook.

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Then, controversy hit its leadership. In 2017, co-founder Chloe Coscarelli was removed from the company after being found "grossly negligent" by an arbitrator, per Eater. Coscarelli, who sued ESquared CEO and By Chloe shareholder Jimmy Haber, has said that she was pressured to sell meat by Haber. (Haber is also the father of cofounder Samantha Wasser, who responded to Coscarelli's allegation by calling it "outrageous" and denying any plans to sell meat.) In 2018, Coscarelli sued By Chloe claiming the chain used her name after she had been dismissed by the company, as reported by Eater. The lawsuit also alleged that Haber made advances toward Coscarelli that she rejected, which she said led to an effort to push her out.

As part of the bankruptcy proceedings, Haber stepped down from his role as interim CEO and board member, a company spokesperson confirmed to Business Insider.

Like most restaurants, the pandemic has also affected By Chloe's business, with revenue down by 67% this year, and the brand has laid off or furloughed about 50% of its workers, according to The Wall Street Journal. The company received $2.7 million in PPP loans earlier this year.