Former employees of Catalina Restaurant Group Inc. said they are still reeling from the company’s surprise announcement last week that it had closed 38 Coco’s Bakery restaurants and 35 Carrows units.
San Antonio-based Food Management Partners, or FMP, acquired Carlsbad, Calif.-based Catalina Restaurant Group, parent of the family-dining concepts Coco’s and Carrows, last month, and expressed optimism about both brands.
But on its first official day of ownership, on April 1, FMP abruptly shuttered 75 of the company’s 149 restaurants, according to former employees.
In a statement last week, FMP officials said the units were not performing at a competitive financial level, and that difficult decisions were necessary to make the two brands stronger at both the company and franchise levels.
“Unfortunately, this roadmap to sustainability may include restaurant closings,” said Peter Donbavand, vice president of business development for Catalina Restaurant Group.
But according to former employees, unit-level team members and suppliers did not learn of the closures until they arrived at the restaurants that day and found a sign on the door announcing the closures. Final paychecks were distributed on Friday.
At the Carlsbad headquarters, nearly all of the roughly 100 employees were also laid off, according to a former employee who said he had worked there.
FMP declined to comment on the number of restaurants that were closed or respond to employee accounts of the layoffs.
Former employees, who asked not to be identified, said the new parent company also offered no severance pay, and medical insurance benefits were scheduled to end after one week.
Those with company cars were asked to leave their vehicles that day and find another way to get home.
One former employee, who asked not to be identified, said both Coco’s and Carrows were struggling with declining sales, so some closures were expected. But he said he was shocked by the way the new owners handled the mass layoffs. He estimated that more than 3,000 workers lost their jobs.
“I felt horrible, and I still do, for the restaurant managers and line cooks who showed up for work and the door was locked. There was no corporate email, no notification,” he said. “Some of them show up at 4:30 in the morning, and there’s just a sign on the door.”
Another former employee wrote in an email to Nation’s Restaurant News: “FMP’s actions will not only affect the immediate company, but all the companies who have supported Catalina Restaurant Group. Today, the state of California is processing unemployment and on the financial hook for the actions of this Texas company.”
The 75 closures amounted to half of the company’s restaurants, and included the two-unit fast-casual concept Ranch House Café and Grill.
When the acquisition was announced in March, Catalina operated 97 company-owned Coco’s units and 50 company-owned Carrows locations, along with the two Ranch House restaurants.
Another 12 Coco’s locations are franchised, along with two Carrows restaurants. Franchised units were not expected to be immediately affected.
Most of the shuttered restaurants were located in California, although some units also closed in Arizona and Nevada.
According to Nation’s Restaurant News’ Second 100 report, Coco’s had estimated U.S. systemwide sales of $141.5 million for fiscal 2013, a decline of 2 percent from the previous year. The chain had 113 units at the end of the year.
Carrows had estimated domestic systemwide sales of $55.2 million, a 5-percent drop from the prior year. The chain ended fiscal 2013 with 58 units.