Restaurant owner Perkins & Marie Callender's is seeking Chapter 11 bankruptcy protection and has closed the three Marie Callender restaurants in Washington state.
Restaurant owner Perkins & Marie Callender’s is seeking Chapter 11 bankruptcy protection and has closed the three Marie Callender restaurants in Washington state.
The owner of Perkins Restaurant & Bakery and Marie Callender’s chains cited the weak economic climate, particularly in Florida and California, where many of its restaurants are located.
Documents filed Monday with the United States Bankruptcy Court in Delaware indicated the company could not afford to build new restaurants and upgrade existing ones, so it lost traffic to better-funded restaurant competitors. The company has 160 owned and 314 franchised Perkins restaurants and 85 owned and 37 franchised Marie Callender’s.
A manager at the Seattle restaurant told KOMO-TV that he had 25 people in the restaurant on Sunday for a birthday party when he was told he had to tell them to leave. The manager told KOMO that the three restaurants in Washington employed more than 100 people.
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The Perkins website showed six restaurants in Washington state, all in Eastern Washington.
Perkins & Marie Callender’s listed assets of $290 million and debt of $441 million. In a court filing, company lawyer Robert Brady said it plans to shut about 65 restaurants and eliminate about 2,500 jobs.
Chief Executive Joseph Trungale said in November that “the languishing economy, including declines in consumer confidence and sluggish consumer spending and increased commodity costs” hurt sales in the quarter ended Oct. 3.
Higher costs for goods such as dairy, eggs, seafood and pork, which accounted for 25.4 percent of sales, were only partly offset by more efficient pie-making, according to a quarterly report. Labor and benefit costs also rose.
In addition to its restaurants, the company sells pies, muffins, batters and other bakery products to customers including supermarkets, court filings show. Sales in the 2010 third quarter fell to $108.7 million from $115.5 million a year earlier as the net loss widened to $12.3 million from $11.2 million.
Restaurant companies already in bankruptcy include Sbarro, operator of about a 1,000 pizza restaurants. Bennigan’s and Steak & Ale, both owned by Metromedia Restaurant Group; Uno Restaurant Holdings and Buffets Holdings filed for bankruptcy during the past three years.
Perkins & Marie Callender’s didn’t make a $9.5 million interest payment due April 1 on $190 million of 10 percent senior unsecured notes that mature in 2013. Standard & Poor’s lowered its rating on the company, saying it probably wouldn’t make a May 31 payment either.
Information from The Associated Press and Bloomberg News was included in this report.