Buffet Restaurant Operator Wants Out of Master Lease
- Jul 11, 2008
Buffets Holdings Inc., through a number of its subsidiaries, has filed a motion with the U.S. Bankruptcy Court for the District of Delaware seeking to reject a master land and building lease for 129 of the company’s restaurants. The motion also seeks court authorization to close 127 of these locations by the end of August (two have already closed). In Eagan, Minn.-based Buffets Holdings’ motion, the company claims a number of issues with the master lease, including above-market rents, mandatory annual rent increases of 2 percent or more and provisions that provide little recourse when restaurants perform poorly. New York-based Fortress Investment Group L.L.C., is the holder of the master lease. All but seven of the restaurants covered by the master lease operate under the Ryan’s or Fire Mountain brand names. All together, Buffets Holdings operates 569 restaurants in 39 states, comprised of 559 steak-buffet restaurants and 10 Tahoe Joe’s Famous Steakhouse restaurants, and franchises 17 steak-buffet restaurants in six states. The restaurants are mainly operated under the Old Country Buffet, HomeTown Buffet, Ryan’s and Fire Mountain brands. The company filed for Chapter 11 bankruptcy protection in January. A hearing for the lease rejection motion has been scheduled for July 30.