- Restaurant chain enters Chapter 11 with restructuring deal
- CEO Borgese to step down and company will close some stores
Logan’s Roadhouse Inc. filed for bankruptcy in Delaware Monday after competition from rival casual-dining chains ate into its sales.
The operator and franchiser of over 250 roadhouse-themed restaurants in 23 U.S. states has suffered as other companies offered steep discounts and improved technology with tabletop tablets and order-ahead capabilities.
The Nashville, Tennessee-based chain tried to attract diners with Southern-inspired cuisine such as bread pudding, brisket nachos and glazed chicken wings, as well as Happy Hour deals, but revenue sill fell 9.9 percent to $131.3 million in the quarter ended Oct. 28.
Logan’s has entered into a restructuring support agreement with revolving facility lenders and holders of over 83.9 percent of about $378 million in notes that will reduce debt by over $300 million, Keith Maib, chief restructuring officer, said in court papers. The agreement also includes exit financing, Maib said.
As a part of the plan, Sam Borgese, who has been chief executive officer since 2014, will resign, according to a statement. The company also said it’s identified 18 restaurants it will close and expects to help employees with reassignments to other Logan’s restaurants, outplacement services and assistance with applying for jobs.
The chain had assets of $347.2 million and debt of $546.1 million as of June 30, according to court filings. About 10 percent of Logan’s Roadhouse restaurants are franchised.
Logan’s will seek interim approval to borrow as much as $10 million of a total of $25 million in debtor-in-possession financing. A hearing has been scheduled for Tuesday.
The company’s first location opened in 1991 in Lexington, Kentucky. Cracker Barrel Old Country Store Inc., another casual-dining restaurant, bought the chain in 1999. In 2010, Roadhouse Holding Inc., formed by Kelso & Co. and some management, acquired Logan’s. New York-based Kelso owned 97 percent of the newly formed company’s stock at the time, according to regulatory filings.
The case is In re Roadhouse Holding Inc., 16-11819, U.S. Bankruptcy Court, District of Delaware.