Restaurant Operator Garden Fresh Files for Chapter 11 Bankruptcy

by San Antonio Attorney

The parent company of the Sweet Tomatoes and Souplantation eat-all-you-can chains sought for bankruptcy protection on Oct. 3 to carry out a sale of the restaurants amid the ongoing harsh conditions of the industry.

Garden Fresh Restaurant Corp. aims to shutter as many as 30 unprofitable locations as part of its Chapter 11 bankruptcy plan.  The owner of the restaurant chains currently operates 124 units, mainly in the Southwest and on the West Coast.

The company talked about its plan to sell the units to second-lien lenders, depending on the higher and better offers by other interested parties.

The company CEO, John Mordberg, said in an official statement that the operations of Garden Fresh will not be affected by the bankruptcy case.  He also said that they expect to improve the structure of their finances through the reorganization.

Garden Fresh, owned by Sun Partners, is the ninth chain of restaurants driven into bankruptcy within the past twelve months.  Recently, fast-casual dining chain Cosi sought for bankruptcy protection due to falling sales.

Assessments of traffic in restaurants reveal that it is slowing down, despite of rising disposable income, indicating that more people are eating at home rather than spending more money in restaurants.

Many buffet restaurants have been severely affected by the drop of sales in the industry.  For example, Ovations Brands, the parent company of Old Country Buffet and HomeTown Buffet, has filed for bankruptcy for the third time this year.

The restaurants operated by Garden Fresh had been renovated but an industry observer said the efforts were hindered by older stores with unfavorable leases and poor sales.  Sweet Tomatoes suffered $187.2 million in losses recently.

According to food news and dining guide Eater, the fall of the buffet business model is a result of the surge in new types of eatery, such as farm-to-table menus and fast casual dining.

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