The Village Inn and Bakers Square restaurant chains, after years of losses, filed for bankruptcy on Monday (Jan. 27), The Wall Street Journal reported.
The Nashville, Tennessee-based company faced multiple obstacles, including new fast-casual competitors and larger rivals. They had recently laid off around 1,100 employees and closed down 33 underachieving locations.
Increased labor costs in many states, as well as multiple locations with a lack of profit and untenable operating expenses, contributed to the chain’s downfall.
Operator American Blue Ribbon Holdings said they sustained around $11 million in losses in 2018 and $7 million last year. They had received funding assistance from a corporate parent and other affiliates, but some of those affiliates declined to continue helping based on projected 2020 losses.
Blue Ribbon filed for bankruptcy in the U.S. Bankruptcy Court of Wilmington, Delaware. The firm said they would look at reorganizing in Chapter 11 and “will explore a variety of strategic and structural initiatives to best position the company for success in the future.”
The company still operates 97 restaurants in 13 states, and employs around 1,500 full-time workers and 3,000 part-time workers. Eighty-four Village Inn franchise locations are also still open, the report noted.
According to court papers, Blue Ribbon has arranged for a $20 million loan from public investment holding company Cannae Holdings Inc., the company’s majority owner. The funding would go toward buoying the company as it prepares for Chapter 11.
Kurt Schnaubelt, chief financial officer with Blue Ribbon, said the company had tried to secure other loans but were unsuccessful, despite the fact that there was no secured debt weighing down the company’s assets. They do have around $14 million in unsecured debt.
The demise of Village Inn and Bakers Square comes in the wake of several other such closures in recent years, among them Marie Callender’s and Houlihan’s Restaurant + Bar.