Sizzler Steakhouse Files for Chapter 11 Bankruptcy
It's not a great time for steak restaurants with salad bars.
All across the country, American restaurants are locked in a fight for survival. While independent restaurants seem to be closing all too often thanks in no small part to the oft-referenced “uncooperative landlord,” even major players are having trouble making ends meet.
Now imagine taking the problems a normal restaurant has faced during the pandemic and multiply that by the logistical challenges of a salad bar and you have the exact formula for Sizzler’s bankruptcy. Despite sticking around for 62 years and scaling up to 107 locations across the country, the casual dining chain says it expects to complete the Chapter 11 bankruptcy process in the next 120 days to resolve the estimated $1 to $10 million in liabilities it currently holds.
Sizzler’s examination of the factors that led to their bankruptcy should be all too familiar at this point. A company statement cited by Restaurant Business Online describes the filing as “a direct result of the financial impact the Covid-19 pandemic has had on the casual dining sector, particularly long-term indoor dining closures and londlords’ refusal to provide necessary rent abatement.” Despite the challenges, Sizzler says they will “do everything we can to support our employees and franchisees.”
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Sizzler’s slide into bankruptcy began before the pandemic. RBO notes that sales fell an average of 2.5% in the five years leading up to 2020, with the decline accelerating to 3.8% in 2019. Needless to say, pulling out of that nosedive during what will surely go down as the toughest year on record for casual dining outlets was never going to be easy.
As with other bankruptcy proceedings, it’s important to note that Chapter 11 isn’t necessarily the final nail in the coffin for the steak, seafood, and salad bar chain. In addition to restructuring their debt in the hopes of getting back on solid financial footing, the company will also work on renegotiating leases for at least 14 company-operated locations. The company hopes to keep its locations open for business during this period.
Who knows what the future ultimately holds for the Sizzlers of the world. If even America’s surf and turf chains can’t hang on, then we’re really in trouble.