- Casual restaurant chain said to file as soon as this month
- Trip to Chapter 11 would follow skipped interest payment
Logan’s Roadhouse Inc., a Nashville, Tennessee-based steakhouse chain with hundreds of locations, is preparing to file for bankruptcy, according to people familiar with the situation.
The filing for Chapter 11 protection may come as soon as this month, said one of the people, who asked not to be identified because the information is private. The plan hasn’t yet been finalized and could still change. The company, which uses the slogan “Where Steak Rules the Road,” has about 250 restaurants in 26 states.
The move would follow an announcement that Logan’s was skipping debt payments due in April and planned to delay filing annual and quarterly earnings reports. The company also forged a forbearance agreement with lenders that expires on Aug. 15.
Brad Jacobus, a representative for the chain, said the company declined to comment on “market rumors.”
“The company’s leadership continues to be committed to Logan’s future success,” he said in an e-mail.
Logan’s has suffered from declining sales and a broader restaurant slowdown, which has forced chains to rely more heavily on discounts. Many casual-dining competitors, such as Applebee’s and Buffalo Wild Wings Inc., also have seen growth sputter. And fast-casual restaurants, which tout fresh ingredients and quick service, are making life harder on older chains.
Logan’s has been trying to attract diners with Southern-inspired cuisine, such as smoked beef brisket and shrimp-and-grits fritters, as well as happy hour deals. But the comeback hasn’t showed signs of gaining traction.
Revenue fell 9.9 percent to $131.3 million in the three months ended Oct. 28 -- its most recently reported quarter -- compared with $145.7 million a year earlier. Same-store sales fell 4.3 percent in the period, as customer traffic tumbled 7.4 percent. Logan’s had $12.9 million in cash and $525.4 million in liabilities as of Oct. 28.
Logan’s opened its first restaurant in 1991 in Lexington, Kentucky. Cracker Barrel Old Country Store Inc., another casual-dining restaurant, bought the chain for about $179 million in 1999. Cracker Barrel sold Logan’s in 2006 for about $486 million to a group of investment firms. In 2010, the chain agreed to be acquired by an affiliate of Kelso & Co.
In March, Standard & Poor’s Ratings Services changed its liquidity assessment of Logan’s to weak, saying “declining foot traffic has contributed to the erosion of liquidity.” The revision came after the company said it was in talks with some of its stakeholders about strategic alternatives to cut debt and improve liquidity. The following month, S&P said it would downgrade the chain further, to D from CCC,- after it skipped the interest payments.
Logan’s would join fellow restaurant chain Buffets LLC in Chapter 11. That company filed in March, making its third bankruptcy trip since 2008.