NEW YORK An affiliate of Fortress Investment Group has offered to take over the operations of 127 Ryan’s and Fire Mountain restaurants from Buffets Holdings Inc., which filed for Chapter 11 bankruptcy protection in January, a Fortress spokesman said. Fortress, which owns the master lease for the units, made the offer in a motion filed in U.S. Bankruptcy Court for the District of Delaware.
Buffets, however, recently asked the court for permission to reject the master lease for those restaurants so it could close them by the end of August, according to a statement the company released July 10. A hearing is scheduled for July 30.
Buffets said that negotiations with Fortress “have not been productive.” In its motion, Buffets objected to alleged above-market rents, mandatory annual rent increases of 2 percent or more and other provisions “that provide little recourse when units perform poorly.”
Asource familiar with the matter said Fortress is willing to take over operations of the restaurants to avoid putting 7,500 employees out of work and leaving “40 million on the table.”
Buffets, based in Eagan, Minn., currently oversees 569 restaurants in 39 states under the Old Country Buffet, HomeTown Buffet, Ryan’s, Fire Mountain and Tahoe Joe’s Famous Steakhouse brands. The buffet company acquired Ryan’s in 2006 for $876 million.
At the time of its Chapter 11 filing, a Buffets executive blamed the company’s woes on an excess of debt, consumer belt-tightening that resulted in declining sales and vastly higher operating costs.