SIZZLER CLOSES OUTLETS : 136 RESTAURANTS SHED TO CUT COSTS.
Sizzler International Inc., the low-priced steak and salad buffet chain, shuttered 136 money-losing domestic restaurants on Monday after a weekend bankruptcy filing designed to shore up the company's finances.
About 4,600 Sizzler workers across the U.S. lost their jobs, including employees at the company's newly closed Encino and Oxnard stores. Other Sizzler restaurants in the San Fernando Valley and Ventura County will remain open.
Northern California took a heavy hit, where 32 restaurants were closed and about 1,100 workers lost jobs. Nine restaurants were closed in Los Angeles and Orange counties, tossing about 300 people out of work.
Sizzler said that it filed for Chapter 11 bankruptcy protection so it could ``effectively address the burden of unproductive leases associated with closed restaurants.''
Sizzler also will replace its current ``buffet court and grill'' concept with the ``U.S.A. American grill'' motif that has been test marketed in several locations. The new menu will included grilled steaks, fish and chicken, pasta and smoked ribs and an upgraded salad bar.
The changes won't be made in Los Angeles for about a year.
``Sizzler is now much better positioned for continuing profitability and growth into the next century,'' Sizzler President and Chief Executive Kevin Perkins said in a statement.
The move leaves Sizzler's domestic operations with 85 company-owned restaurants and 235 franchised restaurants, mostly in the West.
The company operates or licenses 451 Sizzlers worldwide. It also operates 92 Kentucky Fried Chicken restaurants and an Italian restaurant.
Executives maintain that the business, founded 39 years ago in Culver City, is on sound financial ground.
``The balance sheet is in a very strong position, and the company is not financially strapped at all,'' said Sizzler spokesman Fiona Ross.
The retrenching carries some financial pain, though. Sizzler plans to take a $108.9 million charge, equal to $3.92 per share to current year results, and will result in a loss for the fiscal year that ended April 29.
David S. Leibowitz, managing director at Burnham Securities in New York, said that action was needed to boost Sizzler's fortunes in the highly competitive restaurant business.
``The fact is the company has been behind the eight ball for some time now,'' he said. ``The international operation earns a considerable amount of money, about 40 cents to 50 cents per share, and the domestic operation loses considerably more than that.
``The difficulty the company has experienced for the last several years has been the inability to come up with a new concept.''
But that new concept will prove expensive.
Leibowitz estimates that it could cost up to $135,000 to refurbish each restaurant.
Sizzler lost $8 million from its 215 domestic restaurants during the previous business year.
But its international operations were profitable, and had the 130 sagging domestic outlets been closed, the remaining 85 U.S. stores would have turned a $5 million profit, the company said.
Of the 136 restaurants closed, 130 are Sizzlers and six are Buffalo Ranch Steakhouses.
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Jun 4, 1996|
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