HomeTown Buffet and other affiliated buffet chains owned by Ovation (Old Country Buffet, Ryan's, Fire Mountain, and Tahoe Joe's) filed for Chapter 11 bankruptcy protection, its third in eight years. More than 300 U.S. locations may be affected, reports CNBC. [related]
Ovation blames an undisclosed pending lawsuit from the previous owner of the businesses, as well as “unusual” sharp drops in sales, according to Reuters. The lawsuit resulted in an $11.4 million judgement, and sales have fallen 22 percent short of projections by the previous owner. As a result of dropping sales, 74 restaurants have been closed, with an additional 92 to follow in the next 10 days.
The company filed for Chapter 11 bankruptcy in early 2008 to cut its debt by $700 million and cut down on its 626 locations. The second bankruptcy was filed in 2012 to further diminish the number of restaurants from 494.