On Monday, two restaurant companies, Bar Louie and the owner of Village Inn and Bakers Square, filed for federal debt protection, adding to a growing list of restaurant chains that have had to seek court help in disposing of their debts. Here is a look at some of these recent bankruptcy filings as well as the explanations given for their problems.
One of the more surprising bankruptcy filings in recent vintage, the casual-dining chain filed for federal debt protection this week and closed 38 locations. It blamed overexpansion for its filing—specifically, the company built a lot of new units using a combination of debt and cash flow, which kept it from spending on maintenance and upgrades at some locations. That led to inconsistency and some bad sales.
American Blue Ribbon Holdings, the owner of Village Inn and Bakers Square, filed for credit protection after a related company, O’Charley’s owner ABRH, stopped funding the chains’ operating losses. The company has no debt but closed 33 locations and plans to reorganize.
The 300-unit chain closed 44 locations and filed for debt protection last week with $65 million in secured debt. The burger chain filed despite an equity infusion two years ago that cut its debt in half, as well as an all-you-can-eat offer that temporarily lifted sales last year. Krystal said last year it wants to sell up to 150 locations to franchisees.
Granite City Food & Brewery
The casual-dining chain filed for bankruptcy in December. The company blamed a host of problems, including customers shifting their spending away from brick-and-mortar retail, which hurt the company’s locations near shopping malls. The company also blamed the shift in dining from in-restaurant to takeout, including the growth of third-party delivery.
The bar and grill chain filed for debt protection in November. The company had a fair bit of debt ($42.3 million), couldn’t find buyers after a sale process and ended up filing for debt protection with a sale to Landry’s. Like Granite City, Houlihan’s said delivery was a contributor in its filing.