Buffets, Inc. Completes Restructuring and Emerges From Chapter 11
07/19/2012 – ATLANTA (Restaurant News Release) – Buffets, Inc. today announced that it has completed its restructuring and that it has emerged from Chapter 11 reorganization, six months after its pre-negotiated filing on January 18, 2012. Company officials announced the emergence at a strategic planning session with all of its field leadership team members in Atlanta, heralding the development as an opportunity to reinvest in its restaurants facilities, food and fundamentals.
As part of the reorganization, the company eliminated all of its outstanding pre-petition term debt, totaling approximately $255 million, as well as annual interest expense of more than $35 million, and closed approximately 140 underperforming restaurants. With its emergence from Chapter 11, the reorganized company’s outstanding stock is wholly owned by its pre-petition lenders.
“We have achieved all of the restructuring objectives we announced in January, and completed the process both quickly and successfully,” said Mike Andrews, CEO of Buffets. “We have emerged with significantly less debt, a much improved balance sheet and a sustainable capital structure, all of which will allow us to leverage our strong brands as we make investments in the future success of our restaurants.”
At the strategic planning meeting, Chief Marketing Officer Jason Abelkop, who joined the company in early February, unveiled the company’s “Plan to Win” which outlines a renewed emphasis in improving the guest experience through a series of investments in better facilities, better food, and better training and support for its employees.
“Many of the fundamentals in this business are solid,” Abelkop said. “Now that the financial constraints the brand previously experienced have been lifted we can make the right choices to update our interiors and infrastructure so we can consistently serve great tasting food that any of us would be proud to serve to our families.”
In conjunction with its emergence from Chapter 11, Buffets has secured $50 million in exit financing. This financing enables the company to satisfy its Chapter 11 Plan obligations and provide working capital for ongoing operations. Abelkop said some of those funds would be used to address deferred maintenance as well as a top to bottom training program for all employees. He said “re-concepted“ remodels would also begin in fiscal Q2 as the company moves to contemporize the brands. It is expected that about 35-40 units will be renovated this fiscal year and 50-60 in each subsequent year.
Greg Graber, who was named Chief Operating Officer in December 2011, said the “voice of the guest” would be the brand filter for the roll out of all new products and platforms as well as improvements to existing products.
“We are rolling out a 4 Star Approach to our Operations,” Graber said. “We are retraining all employees so that we can enhance our focus on the fundamentals of Cleanliness, Quality, Hospitality and Service. And we are going to hold our people accountable for delivering against these imperatives. That’s why we are creating tools that will help our employees measure if their actions are moving the needle or not as it relates to the guest experience.”
“For the program to be effective everyone needs to embrace the concept that an honest assessment of where we are today matters but that where the restaurants are going in relation to delivering on the guest experience really matters more. This is about fostering a culture of honesty so we can determine the blueprint, restaurant by restaurant, as to what aspects of a great experience we need to work on improving. Those field teams who get there soonest and with the best results will be rewarded with meaningful incentives,” he added.
Buffets, Inc., the nation’s largest steak-buffet restaurant company, currently operates 357 restaurants in 35 states, comprised of 347 steak-buffet restaurants and 10 Tahoe Joe’s Famous Steakhouse® restaurants. The restaurants are principally operated under the Old Country Buffet®, HomeTown® Buffet, Ryan’s® and Fire Mountain® brands. Buffets employs approximately 18,000 team members and serves approximately 100 million customers annually.
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