Economic Slowdown Hits Restaurant Chains – El Torito Seeks Bankruptcy Protection

October 05 00:00 2011

New York, October 5 (RainbowNewsLine.com) – Economic slowdown has hit the restaurant industry very hard with the result that revenues are falling and an increasing number of restaurant chain owners are filing for bankruptcy protection. The latest are the Mexican restaurant chains Chevys Fresh Mex, El Torito and Acapulco that have been badly hit by falling sales and had no option but to file for bankruptcy protection.

RM Restaurant Holding Corp. in Cypress also filed a Chapter 11 petition Tuesday in the U.S. Bankruptcy Court in Delaware. It declared $250 million in debts and $272.2 in assets. From a revenue level of $553 million in 2008, it fell to $478 million last year because fewer customers patronized its 178 restaurants.

Chief Financial Officer Richard P. Dutkiewicz said in the filing that the sorry state of affairs of the restaurants is due to the fact that they are located in states battered by “significant increases in unemployment” and the mortgage crisis. He added that due to the recession, the public was “less prone to spending their disposable income” and that a “meaningful improvement in the economy” is not likely this year.

There was a significant fall in a performance index created by the National Restaurant Assn. Trade group as it fell last week to its lowest level in 13 months due to the fall in customer traffic, the after effects of Hurricane Irene and continued uncertainty among restaurant owners.

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