(Reuters) - Logan’s Roadhouse Inc, a steakhouse chain with about 260 restaurants, filed for bankruptcy protection on Monday after struggling with falling sales, rising labor and food costs and competition from casual dining rivals.
The Chapter 11 reorganization is expected to reduce debt by more than $300 million, and give bondholders including a Blackstone Group LP affiliate equity in the company, according to filings with the U.S. bankruptcy court in Delaware.
In a statement, Logan’s said it planned to close 18 underperforming restaurants and that Sam Borgese, its chief executive since October 2014, would leave the company.
Logan’s has been controlled since 2010 by Kelso & Co, a New York-based private equity firm.
The reorganization has support from its bank lenders and most bondholders, Keith Maib, chief restructuring officer of Logan’s parent LRI Holdings Inc, said in a court filing.
Logan’s is obtaining $25 million of financing to keep operating while in bankruptcy.
The company said it has nearly 19,000 employees in its 234 company-owned restaurants in 23 U.S. states. Another 26 restaurants are franchised.
Monday’s filing came four months after Logan’s said it would miss some debt payments and stop filing periodic earnings reports.
Maib said Logan’s has struggled with “poor sales results” as casual diners seek out cheaper alternatives.
Between January and June, sales at Logan’s Roadhouse restaurants declined about 4 percent and customer traffic fell 8.8 percent, Maib said.
Another casual dining chain, Buffets LLC, filed for bankruptcy in March, for the third time since 2008.
Logan’s opened its first restaurant in Lexington, Kentucky in 1991, and was owned by casual dining chain Cracker Barrel Old Country Store Inc from 1999 to 2006.
LRI, Logan’s parent, had $347.2 million of assets and $546.1 million of debts as of June 30, according to its bankruptcy petition.
The case is In re: Roadhouse Holding Inc, U.S. Bankruptcy Court, District of Delaware, No. 16-11819.
Reporting by Jonathan Stempel in New York; Editing by Bernard Orr and Richard Chang