Benningan’s files for bankruptcy

2008-07-30 16:27:43 (GMT) (Caymanmama.com - Business News)

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Plano, Texas (CaymanMama.com) — Restaurant chains Steak & Ale and Benningan’s have filed for Chapter 7 bankruptcy protection and the stores are slated to shut the doors permanently. The companies, owned by Metromedia Restaurant Group of Plano, Texas, filed bankruptcy in Texas’ Eastern District no more than two months after they stated they had no plans to file.

Metromedia’s owner, John Kluge, is now interested in radio stations, medical equipment and entertainment. In filing for Chapter 7 bankruptcy, a company is allowed to liquidate all assets and shut down.

The president of Benningan’s Franchise Operator Association, Larry Briski, said that the franchisees are not a part of the filing and they will not be shut down. There are 138 national and international restaurants owned by franchisees of the company and are fully operational. Still, there are 150 restaurants which are going to be closed. Steve, a waiter working at the Plano branch, said that staff members got phone calls in the morning informing them that the restaurant was going to close.

The bankruptcy filing has listed 38 unique entities which were classified as debtors but did not include the names of the locations that are going to be shut down. Nowadays, the restaurant industry is struggling as consumers are looking to cut their expenses due to high fuel prices, inflation and weak real estate market. These restaurants are also facing intense competition from other chains which are expanding quickly. In addition, the costs of commodities have increased forcing them to either increase their menu price or see their profits plunge.

While filing bankruptcy, Metromedia indicated that there are 49 creditors and it does owe not more than $50,000. The news of filing came as a shock to employees.



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