Reports from around the country filtered in late last week as dozens of Joe’s Crab Shack locations abruptly closed. The chain, which operated close to 140 locations in 2014, left Indiana and Michigan completely. All in all, although no official statement was made, the brand’s website shows 72 currently operating restaurants—or 41 less than the previous week before the closures began.
When Ignite Restaurant Group, the parent company of Joe’s and Brick House Tavern, filed for bankruptcy protection in early June, there were 112 Crab Shacks and 25 Brick House units across the U.S. The company’s website now shows only 23 Brick House restaurants as well. The Consumerist published a running list of closures here.
This news isn’t all that surprising given recent events. Landry’s Inc. won a bankruptcy court action, or auction, for the two brands for $57 million. CEO Tilman Fertitta owned Joe’s Crab Shack in the 1990s before selling it in 2006 to JCS Holdings LLC for $192 million. The company changed its name to Ignite Restaurant Group and went public in May 2012.
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When Ignite first announced it was filing for bankruptcy in June, it was with a different buyer—San Diego-based private equity firm Kelly Companies—lined up. It also noted that all locations would remain open and operating, although that plan was likely to alter once the company changed hands.
Landry’s, which operates more than 50 brands, including The Rainforest Café and Bubba Gump Shrimp Co., bid $60 million and won a deal with the PE firm to act as a “stalking-horse bidder.”
Ignite was initially resistant to the deal, according to The Houston Chronicle. Landry’s offered $60 million in May before dropping its price to $50 million in early June, citing tumbling sales at the two brands for its price change.
Ignite’s same-store sales fell 14.3 percent at Joe’s and 12.6 percent at Brick House in the first quarter versus the prior year. In March, the company was delisted from the Nasdaq Stock Market. Revenues decreased 20.9 percent at Joe’s to $76.1 million in the first quarter versus $96.2 million in the first quarter of 2016. Brick House reported a 12.4-percent drop to $19 million versus $21.7 million.
Predicting more closures, if there are any, could be a geographical practice. Virginia (three), Texas (17), Tennessee (three), South Carolina (three), Pennsylvania (three), New Jersey (four), Maryland (two), Louisiana (two), Kentucky (two), Georgia (three), Florida (eight), Colorado (three), and California (eight) have multiple locations.
Washington, Utah, Ohio, North Carolina, New York, Nevada, Missouri, Iowa, Idaho, Delaware, and Arizona each have only a single unit.
Cutting out those single-unit states would cut Joe’s footprint nearly in half.
Ignite traveled a challenging path in recent years. In 2015, the company sold Macaroni Grill for just $8 million in cash after buying it for $55 million two years prior.
In March, Ignite restructured its leadership and announced that it was pursuing a sale of its business.
