BiState Bistro Associates, a 12-unit T.G.I. Friday's franchisee, filed for Chapter 11 bankruptcy protection last week, a result of financial hardships stemming from the closure of the operator’s 13th location in Fayetteville, Ark.
The Chesterfield, Mo.-based BiState said in bankruptcy court papers that it is seeking to resolve $9.5 million in secured debt through a structured reorganization. All of the franchisee’s 12 restaurants, including five units in the St. Louis area and locations in Oklahoma, Kansas, Missouri and Illinois, will remain open during the reorganization, the company said.
BiState said in its June 2 filing to the U.S. Bankruptcy Court for the Eastern District of Missouri, that the Friday’s unit in Fayetteville was shuttered in December 2009, after declining revenue wrought by the recession and an increased debt commitment from remodeling left BiState unable to meet requirements of a 20-year lease.
When negotiations with landlord Slevin Capital Investments, which had acquired the restaurant’s property in a sale-leaseback transaction, failed, Slevin filed suit against Fayetteville Bistro LLC, the operating entity for the restaurant controlled by BiState.
BiState and its affiliated real estate company, Primrose Restaurant Properties, are managed by Tricorp Management Co., which employs 11 managers and 900 staff members at the 12 Friday’s restaurants. Steve Bell and Bradley Bax indirectly own and control Tricorp through BB Holding Partnership.
Of its $9.5 million in debt, BiState owes about $5.6 million to GE Capital, and the company also attributes $1.7 million of the debt to costs of restaurant remodeling.
BiState said in court documents that it is the fifth-largest franchisee in the T.G.I. Friday’s system.
“The filing primarily affects one former T.G.I. Friday’s restaurant that was already closed down,” Bell said in a statement. “Fayetteville Bistro LLC filed for Chapter 11, along with the guarantors of the lease, not the company that owns the local Friday’s. The parent company of the debtors and all other operating restaurants in the Tricorp family are not in bankruptcy. All payments to creditors, landlords, vendors and the franchisor are current at this time.”
Lee Sanders, president of franchising for T.G.I. Friday’s USA, added, “This is an isolated case and does not extend to other Friday’s franchises owned by the Tricorp organization, all of which remain open for business.”
According to court filings, BiState had revenue of $42.4 million in 2009, down 9.3 percent from 2008 revenue of $46.6 million. Same-store sales fell 6.5 percent in 2008 and 9.3 percent in 2009, including declines of 8.8 percent in 2008, and 17.5 percent in 2009 for the now-shuttered Fayetteville location.
Carrollton, Texas-based Carlson Restaurants Worldwide operates or franchises more than 900 T.G.I. Friday’s restaurants in more than 60 countries. It also franchises the Pick Up Stix fast-casual chain.
Contact Mark Brandau at [email protected].