Private equity firm Hargett Hunter Capital Management has agreed to purchase Texas-based chain Trudy’s Texas Star out of bankruptcy for $6.5 million.
The firm prevailed at an auction on July 23. A hearing to approve the transaction will be held on August 17. The North Carolina-based firm outbid Austin restaurant Steiner Steakhouse, which bid $6.45 million.
The brand operates Trudy’s North Star, Trudy’s Texas Star, Trudy’s South Star, and South Congress Cafe. It was founded in 1977 by Gary Wayne Truesdell. Due to health concerns, he recently stepped aside and allowed his son, Gary Stephen Truesdell, to run the restaurant.
The restaurant filed for bankruptcy on January 22. According to the filing, its financial woes began with the opening of Trudy’s Four Star in 2011, which included a 13,000-square-foot main floor as well as a basement and rooftop patio. The unit lost almost $1 million per year until it closed in January 2019.
The losses from the store placed a “substantial debt” on the company. Soon, the organization became delinquent on payroll taxes, state taxes, and obligations to suppliers and employees. The filing states Trudy’s filed bankruptcy in response to a levy from the IRS, which froze the brand’s credit card receipts.
At the time of the filing, Trudy’s employed 275 full and part-time employees at its three operating locations. When one location temporarily closed in November because of a fire, its employees were reassigned to other Trudy’s locations.
Jeff Brock, Hargett Hunter’s founder and managing partner, told the Austin Business Journal that his firm will “put some tender loving care into the facilities” and ensure “we update everything.” He said the private firm doesn’t have any plans for major expansion.
“What we want to do is get it right,” Brock told the publication. “Everything else will fall into place.”
Hargett Hunter currently has six restaurant brands in its portfolio, including Marugame Udon, Cajun Steamer Bar & Grill, Live.Eat.Surf Restaurants, Original ChopShop Co., Bellagreen, and STACKED.
The brand has reportedly been hit hard by the pandemic. Steve Sather, attorney for Trudy’s, said earlier in July that sales were about 25 percent to 30 percent of prior year volumes, according to the Austin Business Journal.
Gary Stephen Truesdell referred to it as living paycheck to paycheck.
“We got to the point a couple of times where we wondered if we were going to be able to make payroll,” he said to to media outlet. “We’re keeping our employees employed and we’re paying our taxes.”