Pizzeria Uno could be latest in string of bankrupt restaurants


Pizzeria UnoBloomberg News reports that Uno Restaurant Holdings -- which operates Pizzeria Uno -- is the latest in a string of restaurants that can't stay afloat as consumers reverse splurge on their recession diets. It follows Bennigan's and Steak & Ale among those national restaurant chains that couldn't feed banks' hunger for loan repayment.

Bloomberg reports that Uno won't pay the interest due on its debt as scheduled, and S&P downgraded it as a result. It wrote that Uno "will delay paying interest, making use of a 30-day grace period allowed in the terms of its $142 million of notes due 2011, according to a statement from Standard & Poor's. S&P cut Uno by two levels to CC and said it would downgrade again to its lowest rating of D if the West Roxbury, Massachusetts-based company fails to pay on Aug. 15."

In addition to Bennigan's, Bloomberg reported that a big Pizza Hut chain filed for bankruptcy this month -- "Ohio-based Midland Food Services LLC, the operator of 92 Pizza Hut restaurants." I am a big fan of Uno's pizza and its nachos, but I guess that Uno has borrowed more money than its declining sales and rising food and labor costs permit it to repay. It remains to be seen whether it can renegotiate terms with its creditors.

If not, it will probably join its brethren in taking the hit for a lousy economy that's likely to get worse.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.


Retailers, Restaurants Closing Doors

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    Store: Steve & Barry's
    It appears that Steve & Barry's will get a second shot, as Bay Harbour Management, which specializes in turning around distressed and bankrupt properties, offers to buy out some of the teen apparel retailer's assets. The Port Washington, N.Y., had filed for Chapter 11 bankruptcy protection last month and could have closed most if not all of its 276 stores.

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    Store: Boscov's
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    Store: Bennigan's, Steak & Ale
    Why? The Bennigan's and Steak & Ale restaurant chains, owned by the Metromedia Restaurant Group, filed Chapter 7 bankruptcy protection, in which a company seeks to shut down and liquidate its assets. Bennigan's indicated in the filing that it has 38 outstanding creditors and will have no funds remaining after they are repaid.

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    Store: Linens 'n Things
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    Store: Starbucks
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    Paul J. Richards, AFP / Getty Images

    Store: Goody's Family Clothing
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    shopgoodys.com

    Store: A.C. Moore Arts & Crafts
    Stores Closing: 7-10 Stores
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    A.C. Moore

    Store: Home Depot
    Stores Closing: 15
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    Justin Sullivan, Getty Images

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