Business bankruptcy provides an option to help struggling businesses through a difficult time. Tennessee steakhouse chain Logan’s Roadhouse recently filed for Chapter 11 bankruptcy protection. The restaurant chain plans to restructure and close restaurants that are performing poorly. The restaurant chain has experienced years of declining sales, and has seen a reduction in customer traffic. The bankruptcy filing is said to be representative of a trend in the restaurant industry away from traditional dining. Several restaurant chains have filed for bankruptcy, faced closures, have rebranded or experienced other challenges.
The company saw a 10 percent decline in revenue towards the end of 2015 down to $131.3 million. The company’s bankruptcy filing noted an additional 4 percent drop in the first half of 2016 and an 8.8 percent drop in customer traffic during that same time period. As part of the restructuring, the restaurant chain plans to enhance the experience of its customers in the restaurants that will remain open, with the expectation that consumers are seeking less expensive and quicker dining alternatives.
The casual-dining segment of the restaurant industry has been declining for years. Over the summer, Tennessee-based Ruby Tuesday announced it was closing 13 percent of its portfolio of restaurants. A variety of other chains and restaurant companies have announced declining sales, closures and filed for Chapter 11 bankruptcy. Chapter 11 business bankruptcy provides an opportunity for a business that is going through a downturn to restructure and reorganize its debts to help manage the challenges it is facing and enjoy success once again.
When a company is struggling, and considering its options, it is important to understand Chapter 11 bankruptcy may be a consideration. Because the bankruptcy process can be complex, a company considering filing for bankruptcy should be familiar with the process and how it can help the company get back on its feet.
Source: Knoxville News Sentinel, “Logan’s Roadhouse files Chapter 11 bankruptcy, with plans to close 18 restaurants,” Lizzy Alfs, et al., Aug. 31, 2016