Bennigan's, Steak & Ale Close, File for
Bankruptcy Protection
By JEFFREY MCCRACKEN and JANET ADAMY
Wall Street Journal
July 29, 2008 12:47 p.m.
National restaurant chains Bennigan's
and Steak & Ale have closed their doors and filed for Chapter 7 bankruptcy
protection, shuttering more than 300 locations and letting go of thousands of
employees.
It is one of the country's largest restaurant bankruptcies
and eliminates two sit-down chains that have been part of the casual-dining
landscape for decades. The chains will liquidate and aren't likely to re-open.
Late Monday, managers at Bennigan's
and Steak & Ale were told not to open restaurants the next day, according
to two people familiar with the matter. Employees were told there wouldn't be
enough money to pay them for the rest of the week, these people said.
Leah Templeton, a spokeswoman for the company, said in an
email that the companies that filed bankruptcy cases are popularly known as
Steak & Ale, Bennigan's and Tavern restaurants.
She said that not all stores using these trade names have filed bankruptcy, and
that stores operated by franchisees aren't named as debtors in these filings.
She said the filing doesn't include the company's Ponderosa and Bonanza
restaurants, which operate under Metromedia Steakhouses Company L.P.
The pub-themed Bennigan's had 310
restaurants in 32 states. It was founded in 1976. It is heavily concentrated in
states like
The restaurant chains are owned and managed by Plano-based
Metromedia Restaurant Group, a unit of billionaire John Kluge's Metromedia empire.
Metromedia also manages Bonanza, Ponderosa and 29 Degrees
and Southlake Tavern. The latter two also are closing. 29 Degrees opened in
March 2007.
Metromedia Restaurant Group earlier this year violated
several terms of a lending agreement with GE Capital Solutions. It had been in
negotiations with lenders for months to stave off the filing, while closing
some stores and looking for a buyer, said two people involved in the matter.
The filing is the most extreme sign yet of how midpriced sit-down restaurants are undergoing one of their
worst periods in decades. High ingredient and labor costs are eating into
profits, and several years of rapid expansion by bar and grill chains has left
a glut of locations in the market. Pressures on consumer spending like high
gasoline prices and dwindling home values have prompted consumers to eat out
less often or switch to cheaper fast-food meals.
Earlier this year, the parent companies of the
Metromedia has about 750 company and franchised restaurant
sites in more than 40 states and outside the
Mr. Kluge, a 93-year-old German immigrant with an estimated
worth of $9.5 billion, originally bought Bonanza and Ponderosa in the 1980s,
later adding the Bennigan's Grill & Tavern and
Steak & Ale chains into one umbrella company. Mr. Kluge is chairman, CEO
and president of holding company Metromedia Co.
Metromedia's steak houses -- Ponderosa, Bonanza and Steak
& Ale -- are concentrated in states including
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