An ultra popular chain now files for unexpected bankruptcy after two years of negative economic conditions, including rising labor, food and delivery costs.
Denny’s franchisee Denn-Ohio filed for bankruptcy on Oct. 31, according to court documents.
The company currently operates 10 Denny’s restaurants in Michigan, Ohio and Kentucky.
Denny’s reported “substantial growth from 2009 to 2019,” but around 2020, the company was hit by economic challenges related to the COVID-19 pandemic and other ongoing negative conditions inherent to the restaurant industry, the company’s CFO, COO and co-founder Thomas Pilbeam said in the court document.
Pilbeam said that required renovations and post-pandemic trends toward increased delivery sales added to its financial troubles.
“During 2022, the company had total receipts of $17.6 million, but a net business income of negative $1.3 million,” reports RestaurantDive.
“Following these economic hardships, the company closed nine underperforming stores and expects to close two more locations.
At its height, the franchisee operated 27 restaurants.”
Pilbeam said that its remaining eight stores will be positioned to provide “sufficient sales to pay its ongoing reduced operating expenses and successfully reorganize its pre-bankruptcy debt through its Chapter 11 proceeding.”
Prior to declaring bankruptcy, Pilbeam contacted Denny’s corporate, other franchisees, commercial brokers, lenders and investors to see if he could sell or refinance its restaurants, but discovered that there was “extremely limited” demand for Denny’s locations.
The company announced during its earnings call that it has several plans to optimize their restaurants and continue scaling their virtual brand, Banda Burrito.
Off-premise sales made up 19% of sales during the third quarter, which started to rise above 20% at the end of the quarter.
Domestic same-store sales were up by 1.8% during the quarter, which includes a 2.1% increase from domestic franchised restaurants.
Other Economy News Today
A popular retailer now declares an unexpected bankruptcy as it seeks sale in Chapter 11 according to a Texas court.
Party City’s affiliate and a top supplier Anagram Balloons on Nov. 8 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas in Houston.
The company listed $100 million to $500 million in assets and liabilities in its petition.
The balloon retailer manufactures and sells foil balloons and inflated décor domestically and internationally to party supply specialty stores, grocers, mass marketers, parks, drugstores and discount variety stores.
Party City on the other hand provides its products directly to giant retailers like Walmart and Dollar Tree.
Anagram Balloons currently employs about 350 employees and operates a 500,000 square-foot manufacturing, production and distribution facility.
The company “has faced financial distress resulting from unsustainable debt on its balance sheet, lingering effects from the Covid-19 pandemic, global inflation and helium shortages that put strain on its balance sheet,” reports TheStreet.
Anagram sought a restructuring solution with its creditors, but was unable to reach a consensus on a reorganization transaction, according to a declaration from the company’s Chief Restructuring Officer Adrian Frankum of Ankura Consulting Group.
Debtor Anagram Holdings filed a motion seeking $22 million in senior secured debtor-in-possession financing with $10 million available immediately on approval of a interim order in order to fund the bankruptcy case and sales process.
It also seeks a $15 million first-lien asset-based loan facility from its prepetition ABL lender Wells Fargo that will roll up prepetition ABL obligations.
The debtor will seek higher and better offers for its assets from potential buyers through a bankruptcy auction that is proposed for Dec. 5.
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