Sizzler, known for its cheap steaks and all-you-can-eat salad bar, is the latest restaurant chain to attribute its financial struggles to the coronavirus pandemic.
Sizzler USA filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Northern District in California and said the restructuring process will allow it to reduce its long-term debt. The Mission Viejo, California-based company noted its assets and debts are estimated at less than $10 million. The company will also renegotiate leases with landlords to keep its 14 company-owned restaurants open throughout the bankruptcy process.
Sizzler said it aims to complete the Chapter 11 process within about 120 days. The brand’s 93 franchise locations are not part of the bankruptcy filing.
"The filing is 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 landlords’ refusal to provide necessary rent abatement," Sizzler USA said in a statement. The filing "will allow us not only to do everything we can to support our employees and franchisees during this time, but also to be better-positioned for growth as we emerge to become a more vibrant company."
Sizzler had systemwide sales of $269.2 million from 131 units in 2018, according to Franchise Times Top 200+ data, down 1.4 percent from the previous year. Its unit count also dropped 3.7 percent. The company did not submit financial or unit information for 2019.
The casual dining segment overall saw sales drop 0.9 percent in 2018, to $14.4 billion, as noted in Top 200+ reporting, and that decline worsened in 2019 with sales slipping to $11 billion.
President Chris Perkins called the Chapter 11 filing a "new chapter for Sizzler" and referenced the "underlying strength" of the 62-year-old legacy brand.
"Many restaurant brands across the country have suffered because of COVID-19 and Sizzler USA is no exception," he said in a statement that again point to the impact of long-term indoor dining closures and the refusal by landlords to provide rent abatements.
Sizzler has 41 restaurants open for dine-in with limited capacity. The majority of Sizzler restaurants are in California, where it has 38 restaurants open for outdoor dining. The state has limited operations to outdoor dining because of a rise in coronavirus cases over the summer.
SheppardMullin is serving as legal counsel to Sizzler.