CraftWorks Holdings, the parent of Logan’s Roadhouse and Old Chicago Pizza, furloughed thousands of employees and closed its restaurants after the COVID-19 outbreak ruined its bankruptcy plans.
The brand filed for bankruptcy earlier in March and planned to sell its 261 company-owned locations after shuttering 37 underperforming locations this year. The 77 franchised locations were not a part of the deal.
The Wall Street Journal reported that CraftWorks closed its locations “after a devastating collapse in consumer activity and restrictions from state and local authorities on business operations and public gatherings.” According to “people familiar with the matter,” the furloughs included most of Craftworks’ 18,000 employees.
A source told the publication that a small number of employees will remain working in the corporate offices and that it isn’t clear how many stores would reopen. The company did say in a filing, however, it was “mothballing” all of its restaurants and noted “debtors hope that they will be able to restart their operations at some point in the future, but there are many preconditions to a restart, including the obtaining of financing, the hiring of staff, and the ability to create a coherent and profitable business plan.”
And candidly: “The shutdown could persist for a prolonged period time, if not permanently.”
The company had an agreement with senior lender Fortress Credit that provided total consideration of at least $138 million plus the assumption of certain liabilities.
Fortress withdrew a $23 million loan that was helping the company continue operations. CraftWorks’ cash dried up, causing the loan to default, the WSJ reported. Craftworks asked creditors for a “breathing spell” of at least 60 days, acknowledging it could be “possibly longer.”
The brand operates more than 330 domestic restaurants in 39 states and Washington, D.C. Its other brands include Gordon Biersch Brewery Restaurant, Rock Bottom Restaurant, BreweryBig River Grille & Brewing Works, ChopHouse & Brewery, A1A Ale Works, Ragtime Tavern Seafood & Grill, Seven Bridges Grille & Brewery, and Sing Sing, a Big-Bang dueling pianos concept.
Craftworks isn’t the only company reeling from the COVID-19 pandemic. Last week, Danny Meyer, owner of Union Square Hospitality Group, laid off 2,000 employees, or 80 percent of his staff. Cameron Mitchell Restaurants, a multi-concept group that operates 36 locations across 15 brands and 12 states, furloughed about 4,500 of its employees.
Before Craftworks’ bankruptcy filing in March, it shuttered 37 underperforming locations. At the time, Fortress was slated to serve as the “stalking horse bidder” in a court-supervised sales process.