Real Mex Set for Chap. 11 Auction
Real Mex Restaurants, parent of the El Torito, Acapulco and Chevys Fresh Mex restaurant chains, is scheduled to go up for auction later this month as part of an ongoing Chapter 11 reorganization.
Cypress, Calif.-based Real Mex filed for bankruptcy in October, saying the move would speed a turnaround. At the time, company officials said they were considering a sale of assets, as well as negotiating with existing bondholders and stakeholders about a possible purchase.
According to court filings last week, bids are due before Jan. 20, and an auction would be held on Jan. 26 with the court expected to make a ruling on the results by Jan. 30.
Rick Van Warner, a Real Mex spokesman, said bond holders and stake holders — including majority owner Sun Capital Partners — remain “interested parties.”
Real Mex has generated interest from outside parties, although no stalking horse bid has emerged to date.
Sun Capital also is the majority owner of Friendly’s Ice Cream Corp., which filed bankruptcy in October and went up for auction in late December — only to be repurchased by Sun Capital in a credit bid deal expected to close this month.
The nation’s largest operator of full-service Mexican restaurants, Real Mex in June of last year operated 178 units under the El Torito, Acapulco and Chevys brands, as well as one-off Las Brisas Restaurant in Laguna Beach, Calif.; and small regional concepts Who-Song & Larry’s, Casa Gallardo and El Paso Cantina.
The Chevys chain includes 30 franchised locations.
The company also operates a food production subsidiary called Real Mex Foods.
Roughly 30 restaurants have been closed within the past six months, Van Warner said.
Currently, Real Mex operates 144 restaurants, including 60 El Toritos; 50 Chevys; 20 Acapulcos; six El Torito Grills; four Casa Gallardos and the four one-offs: Las Brisas, Who-Song & Larry’s, Siniqual and El Paso Cantina. In addition, Chevys franchisees operate another 24 locations for that brand, the only Real Mex concept with franchise locations.
Most of Real Mex’s restaurants are in California, which was particularly hard hit by economic headwinds over the past few years.
For calendar year 2011, the company said in court filings that revenue totaled $315.5 million through late August, a decline of 3.17 percent compared with the same period the previous year, in part because of restaurant closures and declining customer traffic.
Real Mex has been reworking its leadership over the past several months.
David Goronkin, formerly president and chief executive of Bennigan’s Franchising Co., joined the company as chair, president and chief executive in June. Since then, Edie Ames was named Real Mex’s chief operating officer overseeing the El Torito and Acapulco brands, and Brian Wright was named president of the Chevys brand.
Van Warner said ongoing operational and cultural changes across all brands are taking hold.
“We’re pleased with the progress the brands are continuing to make,” he said. “We’re looking forward to exiting Chapter 11 after the next few weeks and having a stronger platform for growth.”