BRENTWOOD Tenn. Santa Fe Holding Company Inc., parent of the Santa Fe Cattle Co. casual-dining steakhouse chain, filed for Chapter 11 bankruptcy protection last week and closed three of its 30 corporate restaurants.
Among the causes of the Brentwood-based company’s financial woes cited in court documents included negative cash flows from operations and leases that were "financial drains."
The fate of six restaurants in Southwest and Southeast markets that the company’s website says are slated to open later this year was unclear at press time.
The company said it had obtained an unspecified amount from an unspecified source for debtor in possession financing, subject to court approval, to fund ongoing operations. A restructuring consultant has been hired, the company indicated, and its attorneys have filed motions with the bankruptcy court to permit it to pay employees and vendors and otherwise operate as usual during the reorganization.
In documents filed by the company in the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville, Santa Fe said it booked 2008 revenue of about $55 million and anticipated 2009 revenue of about $60 million. It said its monthly payroll obligation for 2,300 employees, excluding benefits, is nearly $2 million and that it owed multiple investors $6.1 million, equipment lessors about $8 million and had other general, unsecured obligations of about $6.2 million.
Santa Fe listed its assets in the $10 million to $50 million range.
Company officials said in a statement that 16 restaurants built during the past two years have “flourished,” but that several older restaurants, including the three closed in unspecified cities, have “under performed.”
In its court filings, the company said that its bankruptcy was fueled, in part, by the need to reject or renegotiate costly leases. It said further that if it is unsuccessful in adjusting such leases it may close additional restaurants.
Santa Fe's 13-year-old concept is fully known as Santa Fe Cattle Co. Steaks. Ribs. Fajitas. Company units are located in Alabama, Georgia, Indiana, Mississippi, Oklahoma and Tennessee, and the lone franchised restaurant is in Hammond, La.
Danny York, Santa Fe chief executive, said his company filed for bankruptcy “in the best interest of all of our dedicated employees and vendor partners.” The move will permit the restaurant company to “strengthen its financial position,” company officials maintained.
Earlier this year, Santa Fe Holding Co. reported preliminary sales results for 2008 of $53.3 million, up from $33.9 million in 2007. Company officials have said that annual volumes for new restaurants are about $3 million, according to some reports.
York has said his company targets smaller, underserved markets for development of its restaurants, which are marketed as having “The Best Steaks, Coldest Beer, Biggest Fans in Town.” The chain’s menu of steaks, ribs, chicken and limited seafood and pasta dishes features entrée prices of $9.99 to $18.99.