The parent of the Logan’s Roadhouse and Old Chicago casual chains said it is “mothballing” all 261 of its restaurants after a lender withdrew financing to keep the bankrupt company in operation until it could emerge from Chapter 11 protection.
The debtor-in-possession financing was withdrawn because of the “unprecedented and unforeseen outbreak of COVID-19,” the company, Craftworks Holdings, said in a court filing.
All of the restaurants have been closed. “The debtors hope that they will be able to restart their operations at some point in the future, but there are many preconditions to a restart, including the obtaining of financing, the hiring of staff, and the ability to create a coherent and profitable business plan,” Craftworks said of itself in the filing. “The shutdown could persist for a prolonged period time, if not permanently.”
Craftworks asked its creditors for “a necessary breathing spell of at least 60 days—and possibly longer.”
It vowed to enhance the chances of reopening the restaurants by cutting expenses “to the bare minimum.”
The situation could be a glimpse of the future for a number of chains that were struggling financially before the pandemic prompted state after state to curb restaurant operations and encourage consumers to stay at home.
Cosi, the pita-sandwich and salad chain, filed for Chapter 11 bankruptcy protection in late February. NPC International, a large Pizza Hut and Wendy’s franchisee, was pursuing a workout plan and reportedly considering a bankruptcy filing before the impact of coronavirus hit crisis proportions. A 73-unit Sonic franchisee, SD Holdings, also sought protection from creditors.
The Fitch Ratings service said in an early March report that Steak ‘n Shake and Checkers may be the next brands to file.
Craftworks filed for Chapter 11 protection on March 3. In addition to Logan’s and Old Chicago, the company operates RockBottom Restaurant & Brewery, Gordon Biersch Brewery Restaurant Group and ChopHouse, among other concepts.
Restaurant have suffered a precipitous drop in sales as a result of social distancing, forced and voluntary. Several chains have reported an uptick in delivery and takeout, the forms of service still permitted under the various emergency actions taken by state and municipal governments.