Restaurant intends to renegotiate leases and restructure debt.
Sizzler, a steakhouse founded 62 years ago, filed for bankruptcy Monday, citing the overwhelming effects of the COVID pandemic.
The proceedings are for the company’s 14 corporate units, which will remain open during bankruptcy. It doesn’t include the more than 90 franchised restaurants. Sizzler is hoping to renegotiate leases and restructure debt and then emerge after about 120 days.
In the court filing, the restaurant listed liabilities and assets of between $1 million and $10 million. Sizzler operates 107 units across 10 states and Puerto Rico.
“Many restaurant brands across the country have suffered because of COVID-19 and Sizzler USA is no exception,” CEO Chris Perkins said in a release shared with multiple outlets. “Our current financial state is a direct consequence of the pandemic’s economic impact due to long-term indoor dining closures and landlords’ refusal to provide necessary rent abatements.”
Sizzler was founded in 1958 by Del and Helen Johnson in Culver City, California, a time when a steak dinner cost just 99 cents. The brand is now headquartered in Mission Viejo, California.
Most of Sizzler’s footprint is located in California, which has had tight restrictions on indoor dining throughout the pandemic. In the Golden State, dining rooms were re-closed indefinitely in July after rising COVID cases. In late August, California Gov. Gavin Newsom announced a color-coded, tiered plan that determined whether a county would be allowed to reopen indoor dining. Orange County, where Sizzler is based, has reopened at 25 percent capacity.
“[Monday’s] decisive action to build a stronger future for Sizzler will allow us not only to do everything we can to support our employees and franchisees during this time, but also to be better-positioned for growth as we emerge to become a more vibrant company,” Perkins said.
Sizzler also declared bankruptcy in June 1996. The Los Angeles Times reported that the company closed more than 130 units and fired 4,600 workers as part of the proceedings. The brand was left with 85 company-run locations and 235 franchises. At the time, Perkins said the bankruptcy would allow the company to escape expensive leases at unprofitable stores.
According to FoodserviceResults, Sizzler totaled $264 million in systemwide sales in 2019—a 1.7 percent year-over-year decrease. It had 123 domestic locations, down from 129 the year before. The chain’s average-unit volumes did tick up a bit, however, to $2.095 million from $2.050 million.
Sizzler’s long-time CEO, Kerry Kramp, left the company in May 2019 as part of a larger executive overhaul, per Restaurant Finance Monitor at the time. Dennis Scott, chief strategic officer, Khaled Bagul, vice president, risk management, leadership development, people support, and culture; Steve McDermott, SVP, finance and analysis; and Tamra Scroggins, director food culture/corporate chef, left as well.
Kerry joined Sizzler in 2008. He was replaced by Perkins, a controlling owner and chairman of Sizzler USA. Perkins was part of a 2011 management-led deal, along with Kramp and Jim Collins, to acquire the brand from Australian based Pacific Equity Partners. Perkins was named non-executive chairman after the purchase and Kramp continued his CEO duties. Pacific owned Sizzler since 2005 and didn’t include the international operations in the agreement.
Sizzler once boasted more than 700 stores worldwide.
The steakhouse chain joins an ever-expanding list of restaurants facing bankruptcy because of the pandemic, including brands like Chuck E. Cheese, California Pizza Kitchen, Souplantation parent Garden Fresh Restaurants, Brio and Bravo parent FoodFirst Global Restaurants, and several more.