Zio’s Restaurant Company LLC filed Chapter 11 bankruptcy on Wednesday, blaming a downturn in the economy across the Southwest driven by lower oil prices, the company said.
Owned by San Antonio-based Food Management Partners, or FMP, Zio’s Restaurant Co. operates the Zio’s Italian Kitchen brand in six states, including Texas, Colorado, New Mexico, Kansas, Missouri, and Oklahoma.
The 16-unit chain will continue to serve customers the same quality food and service as prior to the filing, and vendors will be largely unaffected, the company said in a statement.
“The last 18 months have been a great challenge,” said Peter Donbavand, FMP’s vice president for business development. “The downturn in the economy driven by low oil prices contributing to a large reduction in high-paying oil jobs in many of our markets, as well as the erosion of sales in the casual-dining segment in general, has resulted in a year-over-year sales drop in excess of 10 percent over the last 12 months.
“This downturn, combined with rental rates that are unsustainable at our current sales volume, will not allow us to continue operating under our current structure,” he continued.
The bankruptcy will allow Zio’s to restructure debt and liabilities, and to recapitalize, the company said.
“We are now looking for a structured pathway that will allow us to implement a series of cost-cutting measures across the board, enabling us to meet our past and current obligations, while still operating our restaurants,” said Donbavand.
FMP has a history of acquiring brands in distress and has a history of closing underperforming units.
FMP, for example, acquired Ovation Brands Inc. in August 2015, parent to the Old Country Buffet, HomeTown Buffet and Ryan’s brands, among others. Ovation filed bankruptcy protection in March this year and closed 92 locations.
In 2015, FMP acquired the Coco’s Bakery and Carrows Restaurant brands and closed more than 75 of the 149 restaurants operated under the two brands.
The multiconcept operator also owns the Don Pablo’s, Furr’s Fresh Buffet, Hops, and Tahoe Joe’s brands.