Fresh Acquisitions LLC and Buffets LLC, the parent of five buffet concepts and one steakhouse, declared bankruptcy Tuesday as COVID-19 “significantly disrupted” operations and “severely limited” demand.
Before COVID, the companies operated roughly 90 stores across 27 states. Buffets oversaw Ryan’s, Old Country Buffet, Tahoe Joe’s Famous Steakhouse, HomeTown Buffet, and Fire Mountain, while Fresh Acquisitions operated Furr’s Fresh Buffet. But as federal, state, and local governments implemented shelter-in-place orders, customer spending and foot traffic declined and the restaurants’ liquidity took a major hit.
As a result, all of the stores have closed except six Tahoe Joe’s locations in California. Those six restaurants had a combined revenue of roughly $21 million per year before the pandemic.
FMP Management owned Fresh Acquisitions and Buffets until June 2020 when it “ceased operations.” Even though FMP no longer has operations, it’s also seeking Chapter 11 bankruptcy protection because of its co-liability “for certain of the other Debtors’ liabilities.”
Since January 1, VitaNova Brands, a San Antonio-based company that operates independent restaurants, has provided management services. The company extended up to $3.5 million in debtor-in-possession financing to help the restaurants through the bankruptcy process.
The plan is to initiate a sale and auction process for the intellectual property of Tahoe Joe’s and Furr’s. Chief Restructuring Officer Mark Shapiro said in a filing that although Furr’s restaurants are closed, selling its intellectual property provides “flexibility to the buyer and allows the brand to be reopened in the future, if desired.” It’s unclear what will become of the other brands.
“As with almost every one of our peers, buffet restaurants took the brunt of the loss of sales during the pandemic and as such, the path to success requires hard choices to be made, including the rationalization of our overall footprint,” Jason Kemp, co-founder and CEO of VitaNova, said in a statement.
“The precipitous decline in sales at the restaurants resulting from occupancy restrictions and the banning of family-style buffet dining forced the companies to take extraordinary steps, including the closing of multiple locations,” he continued.
Buffets’ history dates back to 1983 when Buffet, Inc. began operations under the name Old Country Buffet. Thirteen years later, it merged with HomeTown Buffet, bringing the total footprint to 346 company-owned stores and 24 franchises in 36 states. Then in 2006, the group merged with Ryan’s Restaurant Group, which had more than 300 locations across the U.S.
That’s when the trouble started. Due to external economic factors, Buffets and its restaurants declared bankruptcy in 2008 and 2012. FMP purchased the company in 2015 when it had more than 300 stores, only for it to declare bankruptcy once again in 2016.
In a separate move, FMP acquired Furr’s out of bankruptcy in 2014.
Fresh Acquisitions and FMP management owe $13.5 million in secured debt while Buffets has a variety of unsecured liabilities, including $3.9 million in sales taxes, $900,000 in payroll tax obligations, and $507,763 in accrued PTO.
Kemp said VitaNova is “looking forward to emerging from bankruptcy as a stronger operator. He noted that VitaNova will focus on Tahoe Joe’s and Furr’s AYCE Marketplace, a new model in which workers bring food to tables and guests can shop for grocery items.
“These great brands serving great food will create a platform for future growth,” Kemp said.
Buffets across the country have had an extremely difficult time dealing with COVID because their self-serve operations run counter to safety protocols. Garden Fresh Restaurants, parent of Souplantation and Sweet Tomatoes, declared Chapter 7 bankruptcy in spring 2020 and permanently shut down all of its restaurants. Golden Corral’s two largest franchisees, 1069 Restaurant Group and Platinum Corral, each declared Chapter 11 bankruptcy. Cicis entered bankruptcy protection, as well, and was purchased by D&G Investors.
