Strategy

Garden Fresh Files Chapter 11, Plans Sale

The owner of the Souplantation buffet chain is the ninth restaurant operator to be pushed into bankruptcy since November 2015.
Matthew HellerOctober 3, 2016
Garden Fresh Files Chapter 11, Plans Sale

The owner of the Souplantation and Sweet Tomatoes buffet chains filed for bankruptcy on Monday to facilitate a sale of the brands amid the continuing tough environment for restaurants.

Garden Fresh Restaurant Corp. plans to close between 20 and 30 underperforming restaurants as part of its Chapter 11 reorganization. It currently operates 124 units, primarily on the West Coast and in the Southwest.

The company said it anticipated a sale of its business to second-lien lenders, “subject to better and higher bids.”

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“Garden Fresh will operate our business as usual, and we remain focused on providing fresh, wholesome food and great service to our guests,” Garden Fresh CEO John Morberg said in a news release. “By improving our capital structure through this restructuring, we’ll be able to accelerate the changes underway to refresh our restaurants and build a strong future.”

Garden Fresh, which is owned by private-equity firm Sun Partners, is the ninth restaurant operator to be pushed into bankruptcy since November 2015. Last week, sandwich chain Cosi filed for Chapter 11 protection.

“Metrics show that traffic is declining, even as disposable income rises, suggesting that consumers are cooking more at home and turning to such alternatives as meal kit services like Blue Apron,” Restaurant Business said.

“The buffet segment has been one of the hardest-hit markets in the downturn,” it added, citing the recent bankruptcy filing of Ovation Brands, the owner of HomeTown Buffet and Old Country Buffet.

Garden Fresh had been renovating its stores but according to Restaurant Business, it was “hampered by older stores with bad leases and weak sales.” System sales at Sweet Tomatoes declined to $187.2 million in its most recent fiscal year, from $192.1 million two years earlier, according to Nation’s Restaurant News.

“With a newfound focus on fast casual dining, farm-to-table menus (and those made from sustainable ingredients), food incubators, and a resurgence of dining experiments like automats, the buffet has fallen down among the list of profitable restaurant models,” Eater recently reported.

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