Two more Coco’s Bakery locations in Southern California closed on Thursday, officials with owner Food Management Partners, or FMP, confirmed.
FMP, the new owner of parent company Catalina Restaurant Group Inc., has closed a total of 77 locations in recent weeks. Catalina operates and franchises the Coco’s Bakery and Carrows family-dining brands. As of March 31, it operated 149 restaurants.
The news comes as a second class-action lawsuit was filed this week, citing both Carlsbad, Calif.-based Catalina Restaurant Group, as well as new owners San Antonio-based FMP and other unnamed defendants, for failing to give workers adequate notice of mass layoffs, according to court documents.
FMP acquired Catalina in March. On April 1, its first day of ownership, FMP abruptly closed 38 Coco’s Bakery units and 35 Carrows restaurants, as well as two units of the fast-casual Ranch House Café and Grill brand, according to former employees.
FMP officials confirmed Thursday that two more Coco’s locations, in Santa Maria and Manhattan Beach, Calif., were closed, but offered no details. In the past, officials said it was necessary to close restaurants that were not performing at a competitive level to make both brands stronger.
Former employees said thousands of workers were left jobless after the restaurants closed without warning. Many learned of the closures when they showed up for work and found a sign on the door.
The layoffs also included an unknown number of workers at Catalina’s Carlsbad headquarters.
On April 27, a group of former workers from Orange County and Los Angeles County, Calif., filed a class-action lawsuit citing violations of federal and state labor codes known as Worker Readjustment and Retraining, or WARN, acts. The federal WARN Act requires employers of 100 or more workers to give 60 days notice of a plant or facility closure that impacts at least 50 full-time employees.
Filed in the U.S. District Court of Central California, the lawsuit names plaintiffs identified as Roseann Barnett, Gary Bowles, Onesimo Cantoran, Sabino Gonzales, Adriana Macias, Marcos Miranda, Angel Ortiz, Maria Ramirez and Violeta Ramirez, all of whom have worked for Catalina for the past six months, for at least 20 hours per week.
The lawsuit seeks civil penalties of $500 per day for each violation, back pay and reimbursement of medical expenses that would have been covered under the employee benefit plan.
The suit is the second such case. On April 8, former employee Ronald Ross filed a class-action lawsuit, also citing WARN Act violations.
According to Nation’s Restaurant News’ Second 100 census, Coco’s had estimated U.S. systemwide sales of $141.5 million for fiscal 2013, a decrease of nearly 2 percent from the previous year. The chain had 113 units at the end of the year.
Carrows had estimated domestic systemwide sales of $55.2 million, a decrease of nearly 5 percent from the previous year. The chain had 58 units at the end of the year.
The family-dining segment has been showing strength recently, due in part to lower gas prices, analyst Mark Kalinowski of Janney Montgomery Scott LLC said in a report Thursday. Both IHOP and Denny’s have reported strong same-store sales increases.
But the struggles of the Coco’s and Carrows brands indicate that “a rising tide does not lift all boats — a lot of hard work, and smart work, goes into making a restaurant concept successful, even in a segment blessed with some outside help,” Kalinowski wrote.
Both IHOP and Denny’s have made meaningful improvements to their concepts, he noted. And because both brands were born in California and have a strong presence in the state, both will likely benefit from the Catalina closures, he said.
“With over 70 Coco’s and Carrows combined closing, and with most of those closures apparently coming in California, it seems that some IHOP and Denny’s restaurants in the Golden State could benefit in terms of new patrons,” he wrote. “We think they’ll like what they find.”
Contact Lisa Jennings at [email protected].
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