Group plans to pursue a sale of its units.
A franchisee operating 49 IHOP units filed for bankruptcy May 6, citing the COVID-19 pandemic as the primary issue.
CFRA Holdings and its affiliates CFRA LLC and CFRA Tri-Cities LLC operate stores in South Carolina, North Carolina, Tennessee, and Virginia. The group is based in Pinellas County, Florida.
The group said it lacks the liquidity to repay debt or run operations due to the closing of dining rooms. CFRA and the affiliates said they want to gain a “breathing spell” in order to maximize the value of their estates and minimize any further effects from the COVID-19 pandemic. The company plans to “expeditiously pursue” a sale process and sell off its franchises in one or more transactions.
All employees were paid and laid off prior to the bankruptcy filing. The companies have a combined $22.8 million in unsecured debt and earned $78.3 million in revenue last year.
IHOP finished Q1 with a decline of 14.7 percent in same-stores sales, snapping an eight-consecutive period of positive gains. Comps reached a bottom of –81.5 percent in the week ending April 5, but rebounded slightly to –75.4 percent in the week ending April 26. Through April 26, off-premises sales had grown 131.7 percent.
As of March 31, 1,362 domestic IHOP franchise and area license restaurants were open and 347 were closed. The breakfast chain did not indicate the timeline of when dining rooms would reopen during its earnings call in late April.
Other notable bankruptcies since the start of the pandemic include FoodFirst Global Restaurants, Garden Fresh Restaurants, TooJay’s Deli, and Sustainable Restaurant Holdings.