Bennigan’s, Steak & Ale To Close In El Paso

By LAUREN SHEPHERD, AP Business Writer

NEW YORK (AP) – Restaurant chains Bennigan’s and Steak & Ale have filed for Chapter 7 bankruptcy protection and stores owned by its parent company will shut their doors.

ABC-7 has learned that both Bennigan’s and Steak & Ale will close in El Paso. Phone calls to the Bennigan’s in Las Cruces were not returned.

The companies owned by privately held Metromedia Restaurant Group of Plano, Texas, filed for bankruptcy protection on Tuesday in the Eastern District of Texas, less than two months after Metromedia said it was not preparing to do so. It wasn’t clear whether franchisee-owned restaurants would be closing as well.

In a Chapter 7 bankruptcy filing, a company seeks to liquidate its assets and shut down.

Employees at a Bennigan’s in Plano, Texas, were greeted by a sign Tuesday on the front door reading “WE ARE CLOSED. THANK YOU.” Next door, a Steak & Ale sat empty in a deserted parking lot but there was no sign posted.

A waiter named Steve, who wouldn’t give his last name, said the staff got a phone call Tuesday morning telling them the restaurant was closing.

Neither Bennigan’s nor the Metromedia Restaurant Group returned calls for comment. A lawyer listed in the filing, J. Michael Sutherland of Carrington, Coleman, Sloman & Blumenthal LLP, did not return a call.

According to a recorded message on the law firm’s answering system, not all stores using the Bennigan’s and Steak & Ale trade names have filed for bankruptcy and some franchise locations were not included in the filing.

The filing lists 38 separate entities that it classified as “debtors” but does not include a list of locations that are

shutting down.

All restaurants have been struggling as consumers cut back on discretionary spending to better deal with high gas prices, the weak housing market and inflation. The hardest hit have been casual dining chains and bar and grill restaurants, which charge higher prices than fast food and other quick-service chains.

Bar and grill restaurants have also suffered from intense competition. Morningstar analyst John Owens said several chains expanded quickly, making it more difficult for customers to differentiate between them and forcing many companies to cut prices to lure diners.

“Bennigan’s was the weakest of the major players,” Owens said.

Meanwhile, commodity costs have soared, forcing chains to either raise menu prices or see profits plunge.

Credit has also been tight, making it difficult for companies to restructure their debt.

In June, Metromedia Restaurants said it was formulating a proposal to present to its lenders to restructure its debt, but said it was not preparing to file for bankruptcy.

In the filing, the company indicated that it has up to 49 creditors and owes less than $50,000. It said it will have no funds left after administrative expenses are paid to repay its creditors.

The news appeared to be a shock to most of the company’s employees, but some may have had an inkling that the company was not doing well.

Steve, the Bennigan’s waiter in Plano, said he recently went from making $30 on a good lunch shift to only $10.

“Business has been slow,” said Steve, who said he relies on tips. “I went from making a lot of money on a shift to making very little.

Associated Press Writer Paul J. Weber in Dallas contributed to this report.

(Copyright 2008 by The Associated Press. All Rights Reserved.)