The Minnesota company that owns Old Country Buffet and other restaurants in dozens of states has filed for Chapter 11 bankruptcy, citing trouble in the broader economy.
Buffets Holdings Inc. of Eagan said Tuesday that all of its 626 restaurants in Minnesota and 38 other states are open and operating as usual.
In a news release, the company said it intends to use the reorganization to "help drive revenue growth and enhanced profitability across its restaurant brands." Chapter 11 gives protection to a business from creditors while it reorganizes.
"This restructuring is driven primarily by the need to reduce the amount of debt on our balance sheet," said Mike Andrews, chief executive officer. "We also intend to take action to further enhance efficiency and profitability across the organization. This will include performing a thorough review of all underperforming locations over the next several months to determine if they can meet our long-term objectives."
The company also pointed to various "external economic factors" leading up to its pursuit of Chapter 11 protection, including "a significant decline in discretionary spending among its core customers."
Other factors, the company said, included: higher gasoline and energy costs, increased debt service loads due to rate increases on adjustable rate mortgages, lower consumer confidence and the general economic downturn.
Also, increased labor and food costs have challenged the company's bottom line, it said.
Buffet Holding's restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain names. They employ about 37,000 people and serve 200 million customers annually.
PAUL WALSH
