Quaker Steak & Lube said late Monday that it has filed for bankruptcy protection and will be put up for sale.
There is a deal in place to sell the company out of bankruptcy to TravelCenters of America for $25 million. But another company could top that bid in an auction process, and a federal bankruptcy court must approve any deal.
The company expects approval to come early in 2016.
“TravelCenters of America brings in-depth experience and resources to help Quaker Steak & Lube build upon our system’s positive performance and help us fully realize our expansion goals,” Quaker Steak CEO Greg Lippert said in a statement. “Our future at The Lube is bright. We see a positive impact from these transactions to our restaurants.”
Sharon, Pa.-based Quaker Steak was founded in 1974 and has 59 locations. It has something of a gas station theme and is known for its chicken wings and selection of sauces.
Yet there have been growing signs of problems at the company. Wells Fargo sued the casual-dining company in June, saying that Quaker Steak stopped making payments on its loans after September 2014 and owed $4.14 million. A franchisee in Waco, Tex., sued the chain after its store closed in 2014 less than two years after opening and lost money the entire time. The operators blamed the chain for failing to market the brand in Texas.
TravelCenters of America, or “TA,” operates more than 500 restaurants, both full service and quick service, in 253 travel centers and 184 convenience stores.
Any bidder in the auction for Quaker Steak would have to outbid the $25 million acquisition price TA has agreed to pay. TA has also placed a “substantial deposit” toward the purchase price and has agreed to employ Quaker Steak workers. TA would receive a fee and a repayment of its deposit should any other company submit a higher bid.
TA has plans for Quaker Steak, including potentially converting some of its full-service restaurants.
“Quaker Steak & Lube’s unique brand and award-winning menu is a great fit for TA’s primary customers, professional truck drivers and highway motorists,” TA’s CEO, Tom O’Brien, said in a statement. “We’re confident that our existing foodservice operations will provide TA the tools it needs to make Quaker Steak & Lube a nationally recognized restaurant brand.”
He said the company’s travel centers would enhance the variety of offerings it could provide to customers by converting some of TA’s full-service restaurants to Quaker Steak & Lube restaurants.
In addition, O’Brien said, “We expect to expand The Lube’s existing franchise program, as well as its company-operated restaurants separate from our travel centers.”
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