After buffets were ordered to close in Georgia and Florida at the start of the pandemic, Golden Corral franchisee Eric Holm assured his wife that his other business holdings could sustain the comfortable lifestyle they’d enjoyed for the last 20 years. But “I told her, ‘Honey, let’s see how this movie plays out a little longer,’” he recalls.
Fast-forward roughly a year, through a Chapter 11 bankruptcy of his Golden Corral business and countless dealings with landlords and other creditors. (“You sort of have a tidal wave of bills when your cashflow is $150 million and that suddenly stops,” he deadpans.)
Twenty-one of the 33 stores he operated pre-pandemic are back in operation, with at least one more about to fire up its chocolate fountain. Holm ticks off the reopened units’ current sales: $91,000 last week at one store. A branch in the heart of Florida’s tourism territory took in $161,000. Another on that turf drew $155,000.
“We were 6% off 2019 [volumes] in Georgia last week, and 12% in Florida,” says Holm, who was Golden Corral’s largest franchisee at the start of the pandemic. “Our Golden Corral business is going to recover fully and we’re going to be better. I expect we’ll be up 15, 20% in the third quarter.”
The path back was not without its tripwires. Holm had agreed to sell his Golden Corral holdings and expand the operation for the buyer. The deal was struck four weeks before the pandemic hit, scuttling the transaction.
The bills kept coming, but there was no revenue stream to tap.
Plus, “I was carrying $48 million on a non-recourse loan. The banks wanted their money,” he recalls.
Holm remembers telling one landlord, “Hey, have you heard of something called the pandemic? We have it here in Georgia, and it’s really something. We can’t even operate.”
His Golden Corral holding company, 1069 Restaurant Group, filed for Chapter 11 in October. It emerged from court protection five months later, now carrying $53 million because of additional obligations and interest, according to Holm.
Nine units were permanently closed.
“The banks got everything they wanted,” Holm says. “It is what it is. [But] we got the repayment terms we wanted.”
With that breathing room, and capacity restrictions lifted, 1069 could march back toward normal.
While buffets were virtually outlawed in many states, Holm used Paycheck Protection Program funds to renovate his Corrals inside and out at a per-unit cost of $300,000. A replacement of the stores’ furniture was part of the plan, but “when you order 8,000 chairs, you have to wait a bit,” he says.
1069 didn’t race to try the alternative business models that Golden Corral and his franchisees were test-driving to keep sales flowing. “We waited six or seven months until we reopened,” said Holm. “We bounced back to 80% on day one.”
Golden Corral is experimenting with such alternative service channels as drive-thrus, in-store retail areas and fast-casual-like counter service. Holm says he’s going to continue relying on Golden Corral’s extensive serve-yourself spread.
“The buffet is very relevant—it’s in high demand for our customers,” he says. “That’s why they come back.”
He adds that they’ve figured out how do use that format under the new realities of the pandemic. 1069’s units didn’t put arrows on the ground or rope off its self-serve areas. Rather, Holm says, the patrons were aware of fundamental safety protocols and new to follow them.
But the concept has installed glove dispenser systems that provide a glove to patrons at the buffet.
While his operation hasn’t abandoned that service style in favor of pre-plated meals, it is trying Golden Corral’s method for boosting off-premise sales. Franchisees can offer single-entrée meals to go. 1069 just started offering single-plate breakfast meals for carryout.
To-go orders are still not as common as they might be at other chains, he says, but that business is building. He projects that stores may eventually be generating 15% to 20% of their sales from carryout.
As for a sale, “I guess that could happen someday,” Holm says. But for now, “I’m sticking with the buffet. We’re really focused.”
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