Sizzler USA declared bankruptcy on Monday, blaming the coronavirus for hurting sales at the 62-year-old chain and saying it needed to take the step to renegotiate its leases and cut back on its debt.
The Mission Viejo, Calif.-based chain, which operates 107 locations, said it has between $1 million and $10 million in liabilities and the same amount of assets. The company said it expects to emerge from the Chapter 11 bankruptcy process within 120 days.
“The filing is a direct result of the financial impact the COVID-19 pandemic has had on the casual dining sector, particularly long-term indoor dining closures and landlords’ refusal to provide necessary rent abatement,” Sizzler USA said in a statement. The company said the filing would allow the company “to do everything we can to support our employees and franchisees” and also “build a stronger future.”
Sizzler USA has been in decline in recent years. Its unit count declined 6.9% last year, according to data from Restaurant Business sister company Technomic, and the number of locations it operates now is 15 fewer than it operated at the end of 2019.
System sales have averaged a 2.5% decline the past five years, including a 3.8% decline in 2019, according to Technomic. Franchisees operate all but 14 of the company’s locations.
Sizzler says that it needs to renegotiate leases with the landlords for the 14 company-operated restaurants.
“Today’s filing represents a new chapter for Sizzler and it’s an option we’ve undertaken based on the underlying strength of our 62-year-old legacy brand,” Chris Perkins, president of Sizzler USA, said in a statement. “Many restaurant brands across the country have suffered because of COVID-19, and Sizzler USA is no exception.”