Ryan’s at Bradley Square Mall closed its doors on Friday, employees were notified when they arrived for the day.
A corporate employee was at the restaurant at mid-day, but said he was unable to release any information, other than to say the restaurant is no longer doing business in Cleveland.
An employee was at the front entrance of the restaurant Friday, turning away luncheon arrivals.
It was later determined by the Banner that Buffets Inc. of Eagan, Minn., the corporation manager of the local eatery, has completed a “prenegotiated” Chapter 11 plan. A prevision of the restructuring plan includes the closure of at least 81 restaurants, with the Cleveland facility being one of those closed.
In addition to the Cleveland restaurant, Buffets also closed restaurants in Oak Ridge and Murfreesboro in Tennessee and Georgia restaurants in Calhoun, Canton and Cartersville.
This recapitalization is a consensual agreement with senior lenders holding 83 percent of senior debt for the corporation. The plan will convert approximately $245 million of senior secured debt into a controlling equity stake.
“The important step we’re taking is the culmination of a strategic alternatives review that our board of directors initiated in May 2011,” said Mike Andrews, chief executive officer of Buffets.
“Today’s announcement marks the beginning of a new era for Buffets and our many dedicated employees, as well as for our loyal guests and new customers who will enjoy our high quality food, friendly hospitality and unbeatable value through a consistently improving dining experience,” added Andrews in a press release.
The company has taken steps to promptly close 81 restaurants, representing approximately 16 percent of its nearly 500 restaurants nationally.
Some of these restaurants were judged to be underperforming, while others are being closed after attempts to revise lease agreements failed.
“The decision to close these restaurants, though difficult, resulted from a comprehensive, store-by-store analysis of financial performance, occupancy costs, market conditions and the long-term strategy of our reorganized restaurant portfolio,” said Andrews.
In addition to the immediate restaurant closings, The company continues to seek more favorable lease arrangements with its landlords at other locations. Leases that cannot be modified on acceptable terms, may lead to additional closings.
“We will recapitalize our balance sheet, eliminate a burdensome debt load and increase our cash flow, which in turn will strengthen our ability to invest in the improvement of our restaurants through our reconcepting program and other growth-oriented initiatives,” Andrews added.
Buffets Inc. and all of its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in Delaware.
The company also filed a proposed plan of reorganization and related disclosure statement, which have been prenegotiated with, and enjoy the full support of the senior lenders holding 83 percent of the Company’s senior debt.
Andrews said the company anticipates completing the restructuring process and exiting Chapter 11 within approximately six months.
“Similar to eliminating an unsustainable debt burden, reducing our total restaurant footprint by closing unsustainable restaurants will allow the company to focus on improving operations, enhancing our guest experience and making targeted investments that ensure the long-term viability of Buffets,” the CEO said.
“While closing these underperforming restaurants is a necessary part of our restructuring and improving our business, we deeply regret the impact on our dedicated associates in those restaurants that will be closed. The closings in no way reflect their hard work and efforts, and we thank all of our team members for their commitment to delivering the quality, service and value that have been trademarks of our Buffets brands for many years.
“We look forward to continuing to deliver the highest quality food, service and value to our guests as we take action to put our Company in a stronger financial position for the future,” Andrews concluded.
He said the negative is the restaurant chain will not continue in some communities.
Buffets Inc. is the nation’s largest steak-buffet restaurant company, and currently operates 494 restaurants in 38 states. The business is comprised of 483 steak-buffet restaurants and 11 Tahoe Joe’s Famous Steakhouse restaurants.
Buffets employs approximately 28,000 team members and serves approximately 140 million customers annually.