Struggling casual chain Kona Grill filed for Chapter 11 bankruptcy protection Tuesday—a step the company hinted in mid-April could be coming.
The Scottsdale, Arizona-based polished brand has assets of $53.6 million and debts of $74 million, according to the filing in United States Bankruptcy Court for the Delaware District. It has $1.2 million in cash on hand.
Kona Grill had its stock listing suspended last week after missing its annual fee. The company was trading for 14 cents per share on April 25.
Per the filing, Kona Grill closed 15 more restaurants and is down to 27 units. Kona Grill doubled the size of its company from 23 restaurants in 2012 to 46 by 2017. There were 34 locations in 20 states when the company filed its annual report in April.
Four parties with ownership of more than 5 percent of voting stock were listed in the filing: former CEO Berke Bakay, James R. Jundt, Nanyan Zheng, and Renaissance Technologies LLC.
Kona Grill said in April it was seeking a buyer, but could still file for bankruptcy during the strategic review process. It also announced the hiring of Jonathan Tibus as chief executive officer, continuing a series of shakeups at the top. Marcus Jundt, who Tibus replaced, took over as sole CEO in January, less than two months after Kona Grill attempted a dual arrangement with Jundt and restaurateur Steve Schussler. That after COO Jim Kuhn, who replaced Berke Bakay, stepped down in November.
Tibus, managing director with turnaround firm Alvarez & Marsal, has plenty of experience working with brands battling through chapter 11.
He served as CEO of Real Mex Restaurants (Chevy’s, El Torito, Sinigual, and Las Brisas), and led the since dissipated Ignite Restaurant Group (Joe’s Crab Shack and Brickhouse Tavern) and Last Call Operating Co. (Fox & Hound, Champps). All of those companies filed for bankruptcy protection. Real Mex Restaurants did so this past summer. Tibus also served as chief restructuring officer at Quiznos, a quick-service brand that emerged from bankruptcy in 2014, and chief operating officer of Max & Erma’s, which filed for chapter 11 protection in 2009 and nearly shuttered all of its restaurants.
Kona Grill also named Christopher Wells, a managing director at Alvarez & Marsal as well, chief restructuring officer. He previously worked as CFO at Real Mex Restaurants.
Kona Grill said at the time it had 33.2 million in secured debt.
The chain’s same-store sales dropped 12.3 percent in 2018 after declining 5.9 percent in 2017. This after six consecutive years of comparable restaurant sale increases.
Revenue fell 12.4 percent in the fiscal year that ended December 31, year-over-year.
The company also swung a net loss of $31.698 million last year compared to $23.432 million in the previous year. Average-unit volumes dropped to $3.492 million in 2018 from $4.119 million the previous year. EBITDA was negative $15.9 million.
Kona Grill was riding a string of strong results until the downturn. Bakay, an activist investor and director, was named CEO in 2012 and helped Kona Grill’s stock more than quadruple in the next three years. It also scaled up units in that span. The brand had 22 locations when Jundt first departed in 2009 and was at 44 this past September following the closure of two restaurants. All but one of those new locations opened between 2013–2017. Some more recognizable restaurants, like a store on Las Vegas’ Strip and one in Miami, shuttered last year.