WICHITA Kan. Lone Star Steakhouse & Saloon Inc. has closed 26 namesake restaurants because of what the company called “performance-related issues,” paring the chain to 169 branches.
In addition, the company is evaluating whether to reopen a unit in Baton Rouge, La., that burned down about a month ago, said Marc Buehler, chief executive of Wichita-based Lone Star.
Included in the closures were seven of the chain’s eight units in Florida. While all the shuttered restaurants were underperforming, the Florida stores were particularly hard hit by soft economic conditions and also suffered undue margin pressure because of high insurance, food, occupancy, utility and labor costs, said Lone Star spokesman Rick Van Warner. The remaining Lone Star unit in Florida is in Orlando.
Approximately 1,500 employees will be affected by the closures, said Buhler, who noted that they all received severance.
“This has been a challenging couple of months as we’ve had to evaluate the right direction for the concept, but for the health of the system we felt we had to close those units that weren’t performing up to par," Buehler said. "These underperforming units didn’t show signs that they were going to recover anytime soon.
"This is the toughest decision any restaurateur has to make," he added.
Buehler said the company expects to restart the brand's growth late this year or early next year.
Lone Star Steakhouse's system also includes four franchised units in California, one in Guam and 12 in Australia.
Lone Star is owned by Dallas-based private-equity firm Lone Star Funds, which also operates 30 Texas Land & Cattle restaurants.