The Lost Cajun fought hard. And it fought for as long as it could before long-term projections showed an inevitable reality.

With the current rate of royalties and lack of franchises in the pipeline, “I had to say, you know what, we’re going to go broke unless we file for bankruptcy,” founder and owner Raymond Griffin says in an interview with FSR.

Which is what the 26-unit brand did March 21 in the U.S. Bankruptcy Court for the District of Colorado, claiming assets of $338,120.86 and liabilities of $1,446,806.96.

The Lost Cajun Enterprises, LLC, the company’s 2012-formed franchise arm, filed for a voluntary petition for relief under Chapter 11 of Title 11, Subchapter V, Small Business Debtor Reorganization.

The classification is important. On March 27, President Joe Biden signed the “COVID-19 Bankruptcy Relief Extension Act,” which extended personal and small business bankruptcy relief provisions originally part of 2020’s CAREs Act. It now goes through March 27, 2022.

One thing that did was increase eligibility for the Small Business Reorganization Act for businesses filing under Subchapter V of Chapter 11, like The Lost Cajun. It makes Chapter 11 a more streamlined and inexpensive process. Businesses with debt up to $7.5 million can file.

Provisions exclude certain COVID-19 aid payments from income for the purposes of bankruptcy, and increase the debt eligibility threshold for businesses qualifying for certain types of Chapter 11 reorganization bankruptcy.

Griffin says The Lost Cajun plans to present the court with a three-year plan that allows it to “emerge out the other side of it and hopefully get ready for a surge.”

Akerman LLP attorneys David Parham and Amy Leitch filed a successful motion the day after asking for joint administration of the proceedings for The Cajun Enterprises and The Lost Cajun Spice Company, which also declared bankruptcy, listing assets of about $6,000.

Parham and Leitch wrote in the motion, “Given that the restaurant count has shrunk and is anticipated to continue to shrink as a result of COVID and its aftermath, the Debtors filed the instant cases to reorganize their debts and obligations so that Debtors are not, going forward, insolvent.”

What went astray isn’t a complicated story, Griffin says. In 2020, the company was forced into a number of cost-saving measures, including salary reductions for employees, reductions or the elimination of franchise fees for distressed operators facing temporarily closures or capacity restrictions, and the “cessation of payments under the Buy-Sell Agreement,” according to filings.

This latter part refers to a 2018 decision where the company, “and certain other parties,” entered into a “buy-sell agreement” where they purchased all of minority-owner Jonathan Espey’s interest. This would be paid out over time. When the deal was struck between The Lost Cajun and Espey—Griffin’s former partner and the brand’s president—there were 15 franchises, with eight planned openings in 2018. Additionally, 11 units were in the pipeline, “with the expectation that the franchisor would have 10 new franchise store openings on average per year.”

According to court documents, Espey represents the company’s primary creditor, owed $651,000. The company also owes repayment on a $150,000 U.S. Small Business Administration Economic Injury Disaster Loan and a Lakewood bank $173,340 on two Paycheck Protection Program loans.

“Despite assistance from the Debtors [The Lost Cajun], a number of The Lost Cajun franchisees failed and those that remain open suffered significant revenue losses, with some indicating to Franchisor that closings are imminent,” court documents read.

Griffin says The Lost Cajun lost two stores during the pandemic—one in Salida, Colorado, and another in San Antonio, Texas. “They were struggling prior and COVID just put the nail in the coffin,” Griffin says.

Systemwide, Griffin says units are still 30 percent or so down from 2019 levels. They’ve come up a bit in recent weeks, especially in the heart of crawfish season, but still have a way to go. Yet they’re getting by.

“We kept our nose right above the water level,” he says. “And now, they’re in the position where if things don’t go goofy, if we don’t get another big surge or something like that, and people get loosened up this summer, we are going to make it.”

Griffin is no stranger to the journey of running restaurants, or beating back odds. He landed on the venture in October of 2010. He was vacationing to Durango, Colorado, when his late wife, Belinda’s, back gave out. They stopped in Frisco and Griffin, a former fishing lodge owner from Louisiana, decided to set up shop.

He had $35,000 and founded The Lost Cajun in a town 9,000 feet above sea level that averages 175 inches of snow a year.

Roughly $100,000 later, Griffin was stirring pots of gumbo as hordes of diners lined up outside the tiny, 850-square-foot venue.

Griffin’s friend and fishing buddy, Espey, opened the second unit in Breckenridge, Colorado, two years later. And it was time to franchise.

Griffin says when COVID started closing stores, he went and told executives they needed to stop taking royalties (as the filing noted). “Turn them off,” Griffin recalls.

The company burned through most of its cash doing so, which led Griffin back to leadership. He suggested corporate employees take at least a 50 percent pay cut until it could secure PPP funds or cash began to flow back in.

“I said we can cut our current salaries, or we can lay off half our staff,” he says. “And the whole tam, I tell you what, I was so proud, every single one of them said, ‘you know what, I can get by on half.’”

The Lost Cajun closed its corporate office in Covington, Louisiana (a spot it opened in 2019). “We did all the right things that I knew how to do to save money,” Griffin says. “But as this thing progressed, and stores, they’d get them open, and then there’d be another lockdown. We were at 50 percent royalty then zero when they went below a certain number. And we did that all the way through the middle of August. Until we finally got everybody back open and back operating again.”

But even when stores returned, they had to run under restrictions. Off-premises sales before COVID represented less than 10 percent of the chain’s business. It’s now up to 35–40 percent, which is both a sign of innovation and progress, and proof recovery remains in flux.

The Lost Cajun doesn’t have any corporate units. Meaning when the pipeline dried up, so did those $35,000, $40,000 checks that fuel the business.

There were three ready to go when the pandemic struck, stores in South Carolina, Colorado, and Texas. Since they were already under contract and construction, they opened.

But that was it. “Nobody was buying,” Griffin says of pandemic conditions. “We didn’t have any more stores. Right now, we have very few prospects and no stores in the pipeline.”

Yet this isn’t to say the future is dire, he adds. Since filing, Griffin says franchisees have fielded calls asking if they’re closing. “The answer is no,” Griffin says. Unless stores were troubled pre-COVID, he believes they’ll be fine. There’s even a recent store in League City, Texas—no state restrictions—that’s pushing waits on Fridays and Saturdays, and is simply limiting seating due to hiring challenges.

Given how long it takes interest to turn into physical restaurants, though, Griffin thinks it might take a year, year and a half, to get momentum back. Tangible growth might not return until mid, late 2022.

It’s a change of pace for a chain that more than doubled its unit count in 2018. But something Griffin plans to approach head-on. “I ain’t going nowhere,” he says. “You know me. I’m a fighter. I’m going to be there until the very end.”

“My biggest, proudest moment is that we made it this far,” Griffin adds. “And we didn’t close half of our stores or a third of our stores.”

This year likely won’t be profitable for The Lost Cajun. Griffin is hopeful next year will be, however.

In the interim, labor is going to be a major hurdle. Like restaurant chains of all sizes and stripes, finding workers is proving to be one of the biggest roadblocks in the road to COVID recovery. To compete with President Biden’s $300 weekly unemployment boost, extended through the beginning of September in the American Rescue Plan, Griffin says you’d need to pay cooks more than $20 an hour.

“And you can’t do that,” he says. “With the amount of sales right now, the numbers don’t work.”

The program will run out, and employees will come back, Griffin says. It’s simply forcing operators to rethink reopenings today, and development for tomorrow.

Can stores be smaller? Do you need as many hostesses or servers? “We don’t know,” Griffin says. “My crystal ball has been cracked and broken for a long time. What will the next year hold? I hope it’s going to be a boom. And we get back to complete normal.”

One of the biggest learnings has been to-go packaging, especially with sweat-proof containers capable of carrying fried fish. The Lost Cajun linked up with delivery partners, got mobile ordering on line, and set up what it calls, “drive up to pickup” in certain locations. Essentially, customers can pull up and pick up their food in a makeshift drive-thru. No payment needed. No touching of anything.

“There’s a lot of people still doing that,” Griffin says. “They got used to it.” In other terms, convenience will likely play a role in The Lost Cajun’s future, COVID or not.

To the earlier point, however, getting dine-in back and humming is the only true path back. The Lost Cajun is an experience-forward brand known for presenting a paddle of samples to guests who walk in the door.

Griffin often likes to describe it as, “people come in there hoping to be happy but expecting to be disappointed.”

Basically, The Lost Cajun was making a career surprising people. Whether that was Cajun food in Frisco, Colorado, or quality service that eclipses competitors at the price point.

“As always in our stores please, thank you and you’re welcome are not just catch phrases but a part of our way of life,” Griffin previously said.

So to-go can only go so far in reality. “They’re missing the experience,” he says. “They’re missing the whole cultural thing. … But we’re fine. And we will emerge on the other side of this.”