Logan’s Roadhouse Inc. doesn’t want workers to abandon ship as the company works its way through bankruptcy.
As a result, the struggling casual-dining operator, which filed for credit protection in August, is asking a bankruptcy court for the ability to pay executives and employees nearly $1.3 million in potential performance-based bonuses.
A portion of that amount — roughly 17 percent, or $214,357 — would go to eight managers “who hold critical operational leadership or corporate management positions” at the company. The rest would go to corporate managers, field directors and other staff Logan’s Roadhouse considers important for its recovery from bankruptcy.
The request comes amid low unemployment, where restaurant industry managers are frequent targets for headhunters, and restaurant companies are eager to fill positions. Operators have had an increasingly difficult time filling positions. A company going through bankruptcy could seemingly be fertile ground for recruiters.
The incentive plans will help ensure that workers “who are essential to [Logan’s] restructuring efforts, are properly motivated to achieve [Logan’s] operational and financial performance goals,” the company said in a court filing this week.
Logan’s Roadhouse had 257 locations when it filed for federal debt protection. The company plans to close 18 units.
According to bankruptcy filings, Logan’s Roadhouse had revenue of $606.4 million in 2015, but earnings before interest, taxes, depreciation and amortization, or EBITDA, of negative $112 million. The company had $416 million in debt.
In a bankruptcy filing, Logan’s Roadhouse blamed the problem on the weak casual-dining and restaurant environments, coupled with increases in labor and commodity costs. The company said that traffic fell nearly 9 percent in the first half of 2016, while restaurant sales declined nearly 4 percent.
Eight employees who are among the company’s leadership could receive bonuses based on three metrics: Logan’s Roadhouse achieving its bankruptcy plan; achieving cash flow within 10 percent of that plan; and averaging overall customer satisfaction of at least 73 percent. The bonuses would be paid in January.
Logan’s Roadhouse also wants to pay bonuses to 50 people considered “valuable, hard-to-replace, non-insider employees” at the corporate manager or field director level. Those bonuses would be equal to 10 percent of their salary, and would be paid if the workers stay with the company past certain dates.
While Logan’s Roadhouse is requesting more than $1 million for the bonuses, it expects to pay just under $500,000. The excess is designed to provide the company with “necessary resources for future allocations” to certain workers not originally included in that group.
Contact Jonathan Maze at [email protected]
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