The casual pioneer has 44 locations remaining.
Houlihan’s closed more than 10 restaurants this past weekend, including its last St. Louis location, as the bankrupt company prepares for a sale to Landry’s Inc. Local reports filtered out over the last few days, with stores shuttering in New Jersey, Kansas City, Michigan, Dallas, and Illinois. The Grand Rapids, Michigan, restaurant was also a lone-to-market entry for Houlihan’s.
According to the company’s website, there are now 44 restaurants, with one coming in Jonesboro, Arkansas, in the fall. When HRI Holding Corp., the company that oversees Houlihan’s Restaurants Inc., filed for Chapter 11 bankruptcy protection in November, it owned and operated 47 restaurants in 14 states (34 under Houlihan’s branding). It also franchised 23 units, which were not included in the bankruptcy filings.
Houlihan’s shut down Make Room for Truman, a single-unit concept, as well. The company released various, but like-worded messages on Facebook pages regarding the closures, saying in Grand Rapids, “There is never a good time to close a restaurant, but due to the wind down of the bankruptcy estate, Houlihan’s Grand Rapids has closed effective today.”
“Wind down of the bankruptcy estate,” was the common theme.
The company added it would attempt to help relocate employees. “Management is doing everything possible to minimize the impact to affected team members by working to place them at different continuing locations and reaching out to local restaurant companies,” it wrote.
Earlier, a deal with Landry’s was finalized over the holidays. In a notice filed December 26 in the U.S. Bankruptcy Court for the District of Delaware, Judge Mary Walrath approved the asset purchase and authorized the sale of certain assets to the restaurant giant, run by billionaire Tilman Fertitta. The deal was expected to close the following Monday.
Per filings, Houlihan’s reported $202 million in revenue for fiscal 2019 and employed roughly 3,450 people. HRI Holding Corp. owns 100 percent of Houlihan’s Restaurants Inc., but the structure also includes 39 separate entities 93.4 percent owned by affiliates of York Capital Management. The company also directs Bristol Seafood Grill, J. Gilbert's Wood-Fired Grill, and Devon Seafood Grill
Landry’s bid $40 million for substantially all of HRI’s assets. However, the final purchase price was adjusted, according to court documents. The price was reduced based on pro-rated unpaid property taxes, pro-rated unpaid utilities, and other items. It did disclose the new price.
Fertitta’s 600-plus-location empire, which includes Joe’s Crab Shack, Morton’s The Steakhouse, McCormick & Schmick’s, and others, as well as hotels and hotels, will also accept assumed liabilities, including worker’s compensation, accounts payable, and as much as $3 million in gift card obligations.
HRI’s outstanding liabilities, per bankruptcy filings, were $76.9 million. That was nearly as much as its assets—$79.8 million. The biggest unsecured claim belonged to US Foods Inc. at $959,447. According to court documents, the company filed for bankruptcy after closing 12 unprofitable locations. That means Landry’s is taking on a chain pared down by 20-plus stores from earlier in the year.
Additionally, HRI owes roughly $47 million on a loan from December 2015 and has not made a debt or principal payment since December 2018. It has targeted a sale since June to satisfy its debt burden, with the loan coming due in December 2020.
Houlihan’s was founded 1972 in Kansas City by Joe Gilbert & Paul Robinson. It was acquired in 2015 by a holding company that included York Capital Management and Mike Archer, a former Applebee’s, TGI Fridays, and Morton’s president. They purchased the company from Goldner Hawn Johnson & Morrison for an undisclosed amount. Archer assumed the CEO role from Bob Hartnett.
Houlihan’s is considered a big-brother brand to Applebee’s founding in 1980. It’s changed hands several times over the decades, including long runs from Gilbert/Robinson and W.R. Grace and briefly Dennis Reese. The chain shifted direction from casual to polished as it tried to regain footing.
Archer said earlier, “our brands continue to outperform competitors in sales and traffic and our profitability is improving across the Company. This transaction provides us the opportunity to advance these successes and focus on our growth going forward.”
This kind of deal isn’t new for Fertitta, who also owns the NBA franchise Houston Rockets and Golden Nugget casino group.
In September, Landry’s, which has more than 500 restaurants globally, picked up Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille for undisclosed consideration as the company was sold to L Catterton. It also won the right to acquire Restaurants Unlimited for $37 million out of bankruptcy this year.
Previously, Landry’s won the bankruptcy court action in July 2017 to assume ownership of Joe’s Crab Shack and Brick House Tavern + Tap. According to bankruptcy filings, Fertitta’s company offered $57 million.
Fertitta picked up Morton’s Restaurants for about $116.6 million in 2011. The previous November, he agreed to acquire McCormick & Schmick’s in a $131.6 million deal. Landry’s bought California-based Claim Jumper out of bankruptcy with a $76.6 million bid in 2010 and then purchased Bubba Gump two weeks later in early November for an undisclosed amount.
That previous April, Landry’s bought the Oceanaire Seafood Room out of bankruptcy for $23.6 million. A month later, Fertitta acquired Landry’s outright in a deal valued at $1.4 billion, ending a nearly two-year-long bid for the restaurant company, which he already had a 55 percent stake in.
Additionally, Fertitta’s Landcadia Holdings picked up delivery service Waitr in 2018 for $308 million.