Restaurant stories expanded beyond the food and business sections to the legal pages recently, with two companies filing for Chapter 11 bankruptcy reorganization and others filing and settling lawsuits over allegations ranging from theft of confidential documents to loan defaults to employee compensation disputes.
Signs of the economic times
Both Friendly’s and Real Mex Restaurants cited the ongoing economic downturn as the main culprit when they announced Chapter 11 bankruptcy filings Tuesday.
Friendly’s filed for Chapter 11 in Delaware and said it will close 63 stores; on Thursday, the ice cream and burger chain won court approval for $50.6 million loan to keep the company’s remaining 424 stores afloat until the company finds a buyer, Bloomberg reported.
Also on Tuesday, Real Mex Restaurants, the parent of El Torito, Chevys Fresh Mex and Acapulco Mexican Restaurant and the country’s leading Mexican restaurant operator, also filed for bankruptcy and said it would sell its assets. In addition to sluggish sales, the company faces high lease obligations, debt payments and higher food costs, and its cash reserves are down to about $1 million, according to Reuters.
Hooters does want some things left to the imagination
Hooters of America is suing former vice president Joseph Hummel for allegedly stealing reams of confidential marketing and operations data and taking it with him to his new gig as COO at rival “breastaurant” chain Twin Peaks, The Associated Press reported.
Outback settles lawsuit
Late last week, Outback parent OSI Restaurant Partners reached a $33.3 million settlement of a two-year-old lawsuit against franchisee T-Bird Nevada, which defaulted on a loan that OSI had guaranteed, Nation’s Restaurant News reported.
Employees have filed so many pay- and tip-related lawsuits against restaurant chains that law firm Berke-Weiss & Pechman created a website called Waiterpay.com, with advice for employees wondering whether they’re being paid fairly. The firm has made a name for itself, as well as a handsome living, representing restaurant workers since winning a $3.2 million judgment for employees of New York City’s Sparks Steak House, who argued that management was sharing their tips with workers who were ineligible, Restaurant Hospitality reported.