The operator owes $49.7 million in unsecured debt.
Operator 1069 Restaurant Group, Golden Corral’s largest franchisee, filed bankruptcy Tuesday due to COVID’s severe impact.
The Florida-based company, owned by Eric Holm, oversees 33 units across the greater Orlando and Atlanta areas. The number of units grew consistently through the 1990s before more than doubling in 2004 with the addition of 13 stores. Growth continued through the 2000s until it became the biggest franchisee of the buffet brand. 1069 Restaurant Group earned more than $141 million in sales in 2019.
However, business was quickly interrupted when the COVID pandemic arrived in March.
According to the filing, the franchisee closed all restaurants by March 16. From April through July, 1069 Restaurant Group and its subsidiaries considered multiple restructuring options and negotiated with various creditors. As of now, only six locations are open for dine-in service, but 18 more are expected to open by the end of the year. Management is also planning to reject six leases in the near term.
“Mr. Holm and his management team are prepared to implement new designs for the Restaurants to enhance dining safety and will utilize the chapter 11 reorganization process to begin implementing those redesigns while assessing which locations remain viable going forward,” the court document said. “Restaurants are gradually reopening for dine-in services, and additional locations will reopen when management believes it is safe to do so.”
Scott Shuker, whose firm is representing 1069 Restaurant Group in the bankruptcy, told the Orlando Business Journal that one Georgia unit reported positive sales year-over-year this past weekend.
"Early results in Georgia have been promising," Shuker told the news outlet.
1069 Restaurant Group owes $49.7 million in secured debt, $878,000 in state taxes, and $2.63 million in unsecured debt, which does not include lease rejection damages and a disputed $9.3 million Paycheck Protection Program loan.
The COVID crisis has taken a significant toll on restaurants operating via cafeteria-style or buffet. Currently, the CDC recommends restaurants avoid “offering any self-serve food or drink options, such as buffets, salad bars, and drink stations” to maintain healthy environments.
At a September Golden Corral opening in the Bronx, New York—its first Big Apple location (and not related to 1069 Restaurant Group)—the store debuted with outdoor dining and takeout, and delivery service coming.
Upon arrival, guests can order from outdoor registers located behind plexiglass, and then sit at a socially distanced sanitized table. Food is delivered to each table using disposable packaging and utensils. Guests are required to wear masks anytime they are away from their tables as well, and are encouraged to use one of the available handwashing or sanitizing stations Golden Corral placed throughout the space.
Social distancing procedures, including capacity limits, floor markers, table spacing, plate, utensils, and drink delivery, were in place, and “rigorous cleanliness standards” for guest touchpoints reinforced.
Managers perform employee temperature checks before each shift, and all employees wear masks and gloves while working.
Earlier in the year, Garden Fresh Restaurants, the parent of buffet concepts Souplantation and Sweet Tomatoes, declared Chapter 7 bankruptcy and closed all 97 of its units. K&W Cafeterias filed bankruptcy in September and has closed at least 10 units this year. Luby’s, which owns Luby’s Cafeterias, is planning to liquidate its assets and shut down. Additionally, RAVE Restaurant Group, the parent of Pizza Inn, reported that Pizza Inn’s domestic same-store sales were down 39 percent in Q4.
According to Golden Corral’s website, open stores are operating multiple ways depending on location, including cafeteria-style, buffet, patio dining and curbside to-go, family-style, and to-go only.
Per FoodserviceResults, Golden Corral generated $1.635 billion in sales in 2019—a 2.7 percent slip from $1.681 billion in 2018. The chain closed the year with 475 locations, down from 489. Average-unit volumes were $3.39 million.