Perkins & Marie Callender’s Inc., the owner or franchiser of about 600 restaurants, filed for bankruptcy amid reduced consumer spending and higher costs for staples such as sugar, eggs, coffee and dairy products.
The Memphis, Tennessee-based company listed assets of $290 million and debt of $441 million in the today’s Chapter 11 filing in U.S. Bankruptcy Court in Wilmington, Delaware. It plans to shut about 65 restaurants and eliminate about 2,500 jobs, company lawyer Robert S. Brady said in a court filing.
The company’s website lists nine locations in Colorado — four in Metro Denver. The Gazette in Colorado Springs reports three locations there closed Sunday.
It is unclear how many other Colorado locations are affected by the bankruptcy filing and a company spokeswoman has not immediately returned calls.
Chief Executive Officer Joseph Trungale said in November that “the languishing economy, including declines in consumer confidence and sluggish consumer spending and increased commodity costs” hurt sales at the Perkins Restaurant & Bakery and Marie Callender chains in the quarter ended Oct. 3.
Higher costs for goods such as dairy, eggs, seafood and pork, which accounted for 25.4 percent of sales, were only partly offset by more efficient pie-making, according to a quarterly report. Labor and benefit costs also rose.
Founded in 1958 as a pancake house in Ohio, Perkins 12,350 full- and part-time employees at restaurants in the U.S. Midwest, Florida, Pennsylvania and Canada. Buyout firm Castle Harlan Inc. acquired the company in 2005 for $245 million in cash.
In addition to its restaurants, the company sells pies, muffins, batters and other bakery products to customers including supermarkets, court filings show.
Sales in the 2010 third quarter fell to $108.7 million from $115.5 million a year earlier as the net loss widened to $12.3 million from $11.2 million.
Restaurant companies already in bankruptcy include Sbarro Inc., operator of more than 1,000 pizza restaurants. Bennigan’s and Steak & Ale, both owned by Metromedia Restaurant Group; Uno Restaurant Holdings Corp. and Buffets Holdings all filed for bankruptcy during the past three years.
Perkins & Marie Callender’s didn’t make a $9.5 million interest payment due April 1 on $190 million of 10 percent senior unsecured notes that mature in October 2013. Standard & Poor’s lowered its rating on the company, saying it probably wouldn’t make a May 31 payment either.
Holders of the 10 percent notes might recover nothing or as much as 10 cents on the dollar after a default, S&P said. Holders of the $132 million in second-lien, 14 percent notes due in May 2013 might get as much as 50 percent, S&P said.
The case is In re Perkins & Marie Callender’s Inc., 11- 11795, U.S. Bankruptcy Court, District of Delaware (Wilmington).
—With assistance from Heather Smith in Paris. Editors: Glenn Holdcraft, Stephen Farr To contact the reporters on this story: Tiffany Kary in New York at tkary@bloomberg.net; Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net.
To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net.
