It was not surprising to find out that they declared bankruptcy due to a decline in sales. Please read this article to see what other factors were mentioned in the filing.
The parent of Perkins and Marie Callender’s shuttered 32 restaurants before filing for Chapter 11 protection Monday in U.S. Bankruptcy Court in Wilmington, DE.
The company owes more than $114 million to senior lenders.
The company also operates Foxtail Foods, a bakery goods manufacturing business that supplies its restaurants and sells to various third-party customers.
Perkins & Marie Callender’s said an offer is on the table for Perkins and parts of Foxtail Foods to be sold to stalking horse bidder, Perkins Groups. An amount was not disclosed.
Talks are also ongoing to buy Marie Callender’s and all of the Foxtail arm.
The company said its financial performance was negatively affected by “a decline in sales across the family and casual dining industries due to decreased guest traffic.”
The company also credited the bankruptcy to “the compounding impact of negative Perkins and Marie Callender’s sales in 2017 and 2018 on Foxtail—a captive and material vendor to the restaurants.”
Other issues cited were, “an elevated commodity environment; statutory increases in labor costs and an increasingly tight labor market.”
The company did see “dramatic same-store sales increases” since late 2018 as its launched several management initiatives, including a revised marketing and media strategy, and the introduction of an off-premises program.
Monday’s filing said suppliers and other vendors are owed roughly $8 million.
The company is seeking court permission to pay up to $2.5 million of that during proceedings. It owes lenders about $100 million, with total liabilities of $100 million to $500 million. The filing values its current assets at $50 million to $100 million.
Perkins & Marie Callender's Inc. filed for Chapter 11 bankruptcy protection in June 2011.
Currently, the company owns or holds the franchise rights to 400 restaurants. Marie
Callender’s has about 50 domestic units. Earlier in the summer, Perkins had about 370 locations with 254 of them franchised.