Family Favorite Steakhouse Declares Bankruptcy
The coronavirus pandemic has all but obliterated the hospitality industry over the past few months, with several household name companies filing for Chapter 11 bankruptcy. One of the next companies to join this list is Sizzler, a steakhouse with locations across the United States. Sizzler is a well known and beloved steakhouse chain famous for its salad bars, Malibu Chicken, and affordable prices.
Sizzler was founded in 1958 and is based in Mission Viejo, California. There are 112 Sizzler locations total, but only 14 are owned by the Sizzler corporation. The 93 other locations are franchises that are not a part of the bankruptcy. Most of these locations, both franchise and corporate-owned, were forced to close due to the pandemic. Only 41 locations are currently serving dine-in, and 38 offer outdoor service. Sizzler is known for its unlimited salad bar, which is impossible to run with COVID-19 sanitation and social distancing regulations.
Chapter 11 Bankruptcy
Like many other large companies, if Sizzler opted to file under Chapter 11. For the most part, the only other option available to businesses is Chapter 7. Filing Chapter 7 liquidates most types of debt, but the company must cease operations. In a Chapter 11 bankruptcy, on the other hand, the company can continue operating during and the case.
The company’s top creditors will join together as a committee that will have a say in important business decisions such as entering new contracts or opening and closing locations. The company will need to submit a debt restructuring plan to the creditors for approval, who can submit a counterproposal if needed.
Sizzler’s Bankruptcy Plan
In the company’s announcement, Sizzler president Chris Perkins stated that the bankruptcy filing is due to COVID-19 bans on indoor dining as well as their landlords’ refusal to abate rent during the pandemic. The company expects to emerge from bankruptcy in 120 days, or 4 months. Sizzler listed liabilities between $1-10 million on its bankruptcy petition. The bankruptcy was filed to help the company renegotiate its leases for corporate-owned locations, and to decrease the company’s long term debts. Perkins stated that the bankruptcy would assist Sizzler in supporting its employees and franchise owners, but didn’t specify a further plan.
Not Sizzler’s First Bankruptcy
Sizzler previously filed Chapter 11 bankruptcy in 1996. As part of that bankruptcy, 130 locations were closed and 4,600 employees were terminated. At the conclusion of that bankruptcy, there were 85 corporate locations and 235 franchise locations. Sizzler filed this bankruptcy after struggling when Americans’ dining out preferences shifted to healthier options. Sizzler also struggled with mass food poisoning issues in the early 1990’s. The chain itself began offering lighter fare for calorie-conscious diners after emerging from its first bankruptcy.
Other Big Companies to File Bankruptcy During the Pandemic
Fast casual restaurants have been highly impacted by the pandemic. California Pizza Kitchen, Brio Italian Foods, and Chuck E. Cheese all started the Chapter 11 bankruptcy process since the pandemic began. NPC International, which owns more than 300 Wendy’s and 1,200 Pizza Huts, has also filed a Chapter 11 bankruptcy petition. Sweet Tomatoes, a chain that also offers an unlimited salad bar, has filed Chapter 7 and will shut its doors for good.
Restaurants aren’t the only businesses to suffer during the pandemic. Other household names to declare bankruptcy due to the pandemic are J. Crew, JC Penney, Neiman Marcus, Pier 1 Imports, 24 Hour Fitness, Gold’s Gym, Hertz, Papyrus, Men’s Wearhouse, Brooks Brothers, Sur La Table, Ann Taylor, Lane Bryant, New York & Co., Lucky Brand, True Religion, GNC, and more.
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