The economy has claimed another restaurant victim, as Oceanaire Inc., a Minneapolis-based high-end seafood restaurant chain, filed for Chapter 11 bankruptcy Sunday and closed four of its 16 restaurants around the country.
The Oceanaire restaurant in Minneapolis, which opened in 1998, will stay open, said Glenn Massey, the chain's chief financial officer. "It's our flagship restaurant, it was our first restaurant and it continues to maintain its profitability," he said.
Restaurants, from the upscale to the more moderately priced, have been hard hit by the recession, which has many consumers paring back on all but the basics. Americans are cooking at home more and eating out less.
Restaurants around the country have seen a decrease in same-store sales every month for the past 12, according to the National Restaurant Association. The association also reported that 59 percent of restaurants have had a decline in customer traffic, continuing a downward trend that has lasted 21 consecutive months.
The toll on the area's restaurant scene continues to worsen. Morton's on Nicollet Mall, part of the national steakhouse chain, which had operated in Minneapolis for about 18 years, closed Friday. D'Amico Cucina, the high-end Italian restaurant that had been the flagship of local restaurant chain D'Amico & Partners, closed at Butler Square June 27 after 22 years.
Oceanaire had been one of the city's successful exports. It was founded as part of the Parasole restaurant company and was spun off in 2001. It raised $20 million from Clarion Capital Partners in 2004, giving up a 45.4 percent stake in the growing chain. The goal, according to a Clarion news release at the time, was for the chain to become "the nation's first power seafood dining concept by offering ultra-fresh seafood selections flown in daily from around the world." The restaurants were built to feel like the great seafood supper clubs of the 1930s and 1940s. Clarion poured another $4.5 million into the chain last year.
Sales at individual restaurants were said to top $6 million.
Now the company owes between $10 million and $50 million to at least 50 creditors. It estimates its assets at $1 million to $10 million. The fate of a 17th restaurant slated to open in Phoenix is unclear. Oceanaire closed restaurants in Cincinnati, Philadelphia, Seattle and Charlotte, N.C.
According to court filings, Oceanaire has seen a dramatic decrease in sales in most of its restaurants and a number of its newly opened restaurants have not reached maturity or have fallen short of sales and profit expectations.
"During our restructuring, we expect to conduct business as usual in the vast majority of our markets and intend to work with our current vendors and to continue operations without interruptions to our customers," the company said in a news release.
Oceanaire's largest local liability is $31,000, owed to Loring Park Associates for its lease at the Hyatt Regency Minneapolis, 1300 Nicollet Mall.
It also owes about $24,000 to Upper Lakes Foods Inc., a seafood vendor in Cloquet Minn., and about $20,000 to Coastal Seafoods in Minneapolis among others. Neither seafood company returned calls for comment.
Massey expects the company to emerge from bankruptcy by the end of the year.
Alex Robinson • 612-673-7405