PLANO Texas S&A Restaurant Corp., owner of the Bennigan’s Grill & Tavern and Steak and Ale casual-dining brands, filed in court Tuesday for Chapter 7 bankruptcy liquidation and shuttered many of the chains’ company-operated branches. However, the company's franchising arms, Bennigan’s Franchising Co. LP and Steak & Ale Franchising Co. LP, stressed they were not part of the Chapter 7 filing and would continue to support the chains’ 138 domestic and international franchised restaurants, which “remain open and fully operational.”
S&A is part of Metromedia Retaurant Group, whose Metromedia Steakhouses Co. LP is franchisor of the Ponderosa and Bonanza value-priced steakhouse concepts. The filing does not include those brands.
S&A and its affiliates listed assets of as much as $778.9 million and debts of as much as $324.2 million in 38 petitions filed in U.S. Bankruptcy Court in Sherman, Texas. A filing under Chapter 7 of the U.S. Bankruptcy Code governs the liquidation of assets, unlike Chapter 11, which is for protection while a debtor reorganizes.
Managers at a Bennigan’s Sports unit in Addison, Texas, said they were told of the closure Tuesday morning. Guests showed up for lunch only to find the doors closed. The same was found at the Steak & Ale unit next door.
Metromedia spokeswoman Leah Templeton said: “Not all stores using these trade names have filed bankruptcy. For example, stores operated by franchisees are not named as debtors in these filings.” The company declined to say how many stores were closed.
According to the most recent data from Nation's Restaurant News' annual Top 100 survey, Bennigan's 255 domestic units include 159 company stores and 96 franchised locations. The rest of the chain's units are operated by foreign licensees and franchisees. Steak & Ale has about 55 units.
Metromedia Restaurant Group is held by billionaire John Kluge's Metromedia Co. group. The Wall Street Journal in June reported that MRG had violated lending agreements with GE Capital Solutions.
Also in June, Metromedia chief executive Clay Dover resigned, citing differences about the direction of the company. He now serves as president and chief marketing officer for the 70-unit Raising Cane's Chicken Fingers brand.
John Glass of Morgan Stanley Research said Tuesday that while it was a “sad commentary on the current health of the U.S. casual-dining segment," Bennigan's bankruptcy filing would likely benefit rival players, like Chili's and Applebee's.
Glass said that his research team expected U.S. bar-grill capacity to grow less than 1 percent this year, compared with prior expectations of growth of 4.4 percent.
“Bennigan's was heavily levered and a weaker player,” Glass said. “Still, the timing of the filing confirms that July sales trends show continued deterioration.
“While still plagued by high food costs and some deterioration in consumption, we view this news as a long-term positive for casual dining, the bar and grill operators in particular,” the report continued. “With capacity reduced, we believe the remaining participants will see a greater rebound on sales when demand returns to more normalized levels.”
