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Bankrupt brands eye new
chapter, aim to turn page
(Continued from page 1)
Steakhouse. “When [the court]
said ‘Congrats, your plan is confirmed,’ well, I’ve never had the
privilege of giving birth, but it was
a birthing experience for me. ...
We’re on the other side.”
Foodservice consulting firm
Technomic Inc. has tracked at
least 45 restaurant companies
that have filed for bankruptcy
since the beginning of 2008, the
majority of which under Chapter
11, meaning they are looking to
restructure or sell. Many are well
known, including the parent companies to the Ryan’s and Black
Angus Steakhouse chains.
Mounds of additional paperwork
exist under lesser-known operations in bankruptcy, like Rosario’s
Mexican Restaurant in Nashville,
Tenn., or Sara’s Family Restaurant in Ft. Wayne, Ind.
Mountford and his Tampa,
Fla.-based team have experienced
a rough eight months since filing
for Chapter 11 bankruptcy protection late last June. Like many,
Sam Seltzer’s was a victim of too
much growth, too much debt and
the harsh economy, especially in
Florida. Along with the backing of
its largest lender, Capital
Resource Partners, the company
filed to restructure its operations
and finances.
Mountford said the most
important elements of any restructuring are beginning with
the end in sight, acting quickly
and keeping a focus on the people
upon whom the organization
relies, including employees, vendors and customers.
“The first rule in making
money is to stop losing money,” he
said. “A lot of decisions you make
in the beginning are crucial.”
Immediately after the paperwork was completed, Mountford
called every restaurant manager
and vendor personally to both
explain the company’s situation
and outline the new game plan.
Sam Seltzer’s was able to keep
working with every vendor except
one through its bankruptcy with
very few hiccups, he said.
As expected, the chain was
forced to streamline its operations.
The corporate staff was reduced
from 23 to eight employees, and
three out of nine locations were
shuttered.
“The toughest piece is sharpening the saw and making one deep
cut through the fat, through some
of the muscle, but careful enough
not to touch the bone,” he said.
After a few weeks, the business
settled down, and the focus
became execution, including making sure payments were made,
employees were taken care of and
customers understood that the
brand was still there to serve
them. The company worked to
improve its food, its operations
and service, and this past holiday
season, Sam Seltzer’s sold more
gift cards — despite bankruptcy
The first rule in
making money is
to stop losing money. A lot
of decisions you make in
the beginning are crucial.❞
— JOHN MOUNTFORD
CHIEF EXECUTIVE,
SAM SELTZER’S STEAKHOUSE
and weak consumer spending —
than it had in years past. It was a
testament, Mountford said, to a
growing trust with the concept’s
customers.
The company’s goal is to operate as leanly as possible, with cash
only, at least through the tourist
season of 2010, Mountford said.
Only then will it feel like the chain
is out of the woods, he added.
“Navigating your way through
is precarious,” he said. “If you
don’t have a team that rows like
mad, there is nowhere to steer to.
It’s been an easy steer for me with
this team.”
At Denver-based Vicorp, a
court-approved buyer has been
identified, and an auction is set for
next month, effectively bringing
the 300-plus-unit operation to the
end of nearly a year in Chapter 11
bankruptcy.
“When you have the right concept, the right management team
and the right plan, there is light at
the end of the tunnel for restaurant companies,” said Hazem Ouf,
president and chief restructuring
officer of Vicorp.
Vicorp, like many restaurant
companies, was saddled with debt
and operated two concepts, Bakers
Square and Village Inn, in the
weak family-dining segment. It
filed for Chapter 11 in April 2008.
