MINNEAPOLIS The Oceanaire Seafood Room's parent company has filed for Chapter 11 bankruptcy protection and shuttered four of its 16 locations, the company said Monday.
Restaurants in Philadelphia; Charlotte, N.C.; Cincinnati; and Seattle were closed as part of a pre-arranged bankruptcy filing, which the Minneapolis-based company said it expects to exit by the end of October. The twelve remaining Oceanaire Seafood Rooms remain open and are operating without disruption.
“The strategic decision that Oceanaire has chosen to take today will establish a firm financial base and allow us to implement the operational initiatives necessary to build a stronger and more competitive company,” Terry Ryan, chief executive of parent company The Oceanaire Inc., said in a statement.
The pre-negotiated Chapter 11 filing in the U.S. Bankruptcy Court for the Northern District of Texas includes an agreement with lenders — which Oceanaire did not identify — for the use of cash collateral to fund ongoing operations during the bankruptcy case.
“It’s been a challenging economic environment,” Wade Wiestling, vice president of culinary development, said in an interview. “The significant decline in revenues from decreased business travel, from locals, from consumers as a whole, caused many of our underperforming restaurants to become unprofitable.”
Early last year, Oceanaire told Nation’s Restaurant News that between 50 percent and 60 percent of the chain’s weekday sales originate with corporate customers. As the recession took hold in the second half of 2008, businesses slashed corporate spending, which hurt many high-end restaurant chains like Morton’s, Ruth’s Chris Steak House and McCormick & Schmick’s, where business meetings and deal-closing celebrations had become the norm. Double-digit same-store sales plunges have become commonplace among higher-end chain restaurants.
To combat those trends, Oceanaire recently added lower-priced fare, like a 6-ounce beef filet as an alternative to the chain's 10- to 14-ounce steaks, and chefs have said they always strived to keep an entree in the $20 range on the menu. Oceanaire's typical per-person dinner check ranges between $50 and $60.
More focus also was placed on value for customers. Oceanaire began to serve each guest an amuse-bouche to start the meal, rather than just offer the sampler-sized portions to those guests who ordered from the chef-driven, and more expensive, side of the menu.
On Monday, the chain also announced a $20.10 promotion that uses the price point to call for an economic recovery next year. The promotion includes bottles of wine for $20.10 and a three-course tasting menu for $20.10. Each week through this summer, a bottle of red and a bottle of white will be selected for use in the $20.10 promotion. The three-course $20.10 tasting menu will be offered between 5 p.m. and 7 p.m. on Sundays through Thursday.
Founded under Parasole Restaurant Group, Oceanaire was spun off from that company in 2000, and then sold to Clarion Capital Partners LLC in 2004 for $20 million. The New York-based private-equity firm still lists Oceanaire as a current portfolio holding on its website. The retro-designed restaurant chain focuses on delivered-daily seafood and local fare.