The once-bankrupt restaurants are getting back on their feet.

Restructuring a brand out of bankruptcy presents its own set of obstacles. Mix in a global pandemic that’s pounded the industry, and the road to recovery becomes even trickier.

That’s the set of circumstances surrounding SPB Hospitality, the new owner of Logan’s Roadhouse, Old Chicago, and several brewery restaurants.

Former owner Craftworks Holdings declared bankruptcy in March on behalf of its 261 company-run units, and saw its proceedings hampered by the COVID pandemic. The company laid off nearly all of its 18,000 employees, only keeping a small core to run the organization through the restructuring. At one point in March, court documents said fewer than 25 employees remained.

In late May, a federal court approved Fortress Investment Group’s $93 million offer to buy the brands. Without the deal, Craftworks was headed toward Chapter 7 bankruptcy, meaning the company would have surrendered its assets and closed permanently.

SPB CEO Marc Buehler says that throughout the process, the company focused on building the right portfolio of restaurants. He adds restructuring allowed his team to identify the best and brightest locations, consolidate employees, and give restaurants a fighting chance for the next decade.

Stores began reopening April 24, and now 92 percent of the system is online. That includes 103 of 113 Logan’s, all 47 Old Chicago stores, and 28 of the 34 brewery and specialty concepts. In addition, 25 Logan’s and 37 Old Chicago franchises are open.

In total, 194 of the 261 company-owned restaurants have returned, or will do so in the coming weeks. When the federal court approved the $93 million deal, around 150 units were expected to reopen.

SPB’s other restaurants include Rock Bottom Restaurant & Brewery, Gordon Biersch Brewery Restaurants, Big 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.

“Part of that process is you look at the entire portfolio, and we were able to negotiate with landlords in many instances that didn’t want to lose us,” says Buehler, who worked with around 35 landlords. “We were able to strike beneficial deals not only for us, but for the landlords to keep a tenant in place on several locations that we were able to pull back into the portfolio.”

Results vary across the board based on restrictions, but some markets are seeing sales close to flat, Buehler says. Going into reopening, the team set a goal to double off-premises volume, and the restaurants have exceeded expectations. Old Chicago has typically seen off-premises mix 15 percent, but the channel grew to 35 to 40 percent. Logan’s has historically hovered around 10 percent, but off-premises increased to north of 25 percent. Those figures have lowered somewhat with dining rooms reopening, but they’re still above the pre-COVID comparison.

Buehler says the company doesn’t have clear guidance yet on how COVID spikes will affect the brands, but he did note that traffic has slowed from previous weeks.

“I would expect that to be a natural move where I think people will heed the advice of local authorities in the markets they’re in, and they will stay in and they will not be out and about as much as they were,” Buehler says. “Certainly, we want this thing to go away and we want to do our part to make that happen because that’s how we get back to full sales volumes.”

Currently the brand is operating at about 70 percent of prior staffing levels. When fully opened, Buehler says SPB should have about 10,000 to 11,000 employees. Right now, they’re sitting at roughly 6,500.

The CEO says the company’s internal culture has allowed it to rehire great employees.

“On the management side of things, we really have not experienced that many challenges and we have people that were chomping at the bit, so to speak, to get back at it and get back into this hospitality world where they can take care of our guests in their local markets,” he says. “We’ve had challenges on the hourly side of things, but we’ve been able to work through those and work with our teams to get them back in place. I think the back of the house will continue to be challenging just because the wage replacement of the $600 benefit on top of state and local benefits certainly is a disincentive for folks to go back to work, but that becomes much less of a challenge each week, and we’re finding people as we go out and hire and bring in even new team members.”

Buehler explains that Fortress’ acquisition allows SPB to continue a turnaround that began more than a year ago. The main focus has been refining the menu strategy.

Like many other brands, Logan’s and Old Chicago sliced their menu to improve execution during the pandemic. Buehler says the company started with a scaled down menu that included only 50 percent of offerings, and units have added items since then.

At Logan’s, the goal is to deliver the perfect steak and ensure there’s enough items around it to take care of an entire party. For Old Chicago, craft beer continues to be a focus as well as innovating around pizza. The key is to not grow the menu so much that it becomes difficult from a kitchen standpoint and slows the guest experience.

The parent brand rehired culinary, marketing, and development teams to spearhead these strategies.

“We’ve got a really dedicated group of people that are focused specifically on their concepts,” Buehler says. “They’re excited about what the challenges are in front of them and where we can go with these brands.”

Buehler notes that SPB has locations in 39 states, but he foresees plenty of chances to either enter new markets or reenter ones with a better location.

Generally speaking, the brand closed units due to physical challenges, such as a target marketplace moving or the closure of shopping centers and malls. But with the onset of the pandemic and shuttering of numerous restaurants, the industry is preparing for a favorable real estate market, and SPB plans to capitalize, Buehler says. There will even be opportunities to grow the company via brand acquisition.

He knows the industry is faced with a recovery that will last years, but on the other side, the industry veteran is confident that the natural rebalancing of supply and demand will suit operators in the long run.

“While we emerge with a smaller footprint, these are all brands that can grow again down the road,” Buehler says. “And certainly I’m excited about having a partner like Fortress that sees the value here and understands that the industry has been rocked to say the least.”

Chain Restaurants, Feature, Finance, Logan's Roadhouse, Old Chicago