R.J. Gators to Sell Unprofitable Units as Franchises?
Florida-based casual dining franchise RJ Gators parent files for bankruptcy
(FranchisePick.Com) Just last year, CEO Tim Timoteo was talking expansion to 100 units for the 23 unit unit, $8.9M R.J. Gators casual dining franchise chain. Now he’s talking bankruptcy, with $2.5M owed to unsecured creditors. Rumors abound that he’s looking to sell the company, or possibly to sell off unprofitable company owned units as franchises. But if R.J. Gators’ problem is too much competition in an overbuilt restaurant market, how will franchisees running those units - saddled with franchise fees & royalties - be in a better position to compete? And will franchise owners still get service from Sysco, the food distributor that’s owed $1.3M.
June 28, South Florida’s Sun Sentinel reported:
R.J. Gator’s, the Jupiter-based casual restaurant chain, filed this week for Chapter 11 bankruptcy reorganization in West Palm Beach.
The company intends to keep all its restaurants open during the bankruptcy, which could take four to six months to complete, attorney Bradley Shraiberg said Wednesday.
R.J. Gator’s has eight company-owned and 15 franchised restaurants, mostly in Florida.
It could close some of the unprofitable company-owned sites but would prefer to convert those to franchised eateries, Shraiberg said.
According to the Palm Beach Post:
In its U.S. Bankruptcy Court filing, R.J. Gator’s cited increased competition and the high interest rate on its debt as factors for its decision to file for bankruptcy protection.
“Over the past few years, the debtors began experiencing increased competition and a decrease in sales based upon an oversaturation of restaurants in South Florida,” the bankruptcy filing said…
The filing involves the R.J. Gator’s parent company and eight company-owned stores in Palm Beach, Martin, St. Lucie, Indian River and Okeechobee counties. Separate filings also include R.J. Gator’s management company and the entity that receives franchise royalties.
These companies employ 410 employees combined, Shraiberg said.
Some 15 franchise stores throughout Florida and three other Southern states are not affected, Shraiberg said.
Alan Koch, a restaurant broker with Score Realty Inc. in Palm Beach Gardens, said R.J. Gator’s is right about the increasing competition for dining dollars.
“The market has been relatively swamped with new concepts in the fast-casual area,” said Koch, who helped engineer the blockbuster sale of Pompano Beach-based Roadhouse Grill to Duffy’s Sports Grill of Palm Beach Gardens in April.
In addition to Duffy’s, fast-casual concepts such as Moe’s Southwest Grill and Panera Bread also are vying for customers, Koch said. Adding to the bottom-line pressure are increases in food costs, such as produce and dairy, he said.
Boca Raton restaurant broker Jeff Sussman, who worked the Duffy’s deal with Koch, said efforts are afoot to possibly sell the company.
Shraiberg said there are “no plans” to sell the company, but acknowledged that “if the right offer comes along,” that could change.
The bankruptcy filing is an abrupt switch from the fast-growing track that Timoteo had long planned. Even as recently as last year, he was talking about having 100 restaurants by 2010.
Shraiberg said competition wasn’t the main reason R.J. Gator’s has struggled. Shraiberg said “two or three” unprofitable company-owned stores were dragging down the company’s finances.
ARE YOU FAMILIAR WITH THE R.J. GATOR’S FRANCHISE? SHARE YOUR INSIGHT. LEAVE A COMMENT.
FranchisePick.Com: Find the best - and avoid the worst - in franchising
TopNewFranchises.Com: America’s Next Top… Franchise
Franchise Marketing: Telling the truth is good business. Seriously.
Franchise & Marketing Newsletters: Affordable. Stylish. Free.
Related Stories
POSTED IN: R.J. GATORS, xBuyer Beware
7 opinions for R.J. Gators to Sell Unprofitable Units as Franchises?
R.J. Gators to Sell Unprofitable Units as Franchises? at PIGASYS
Jul 1, 2007 at 5:47 pm
[...] Share This [...]
doug
Jul 1, 2007 at 5:59 pm
That’s in my neck of the woods. I actually prefer RJ Gators over Duffy’s. The food is different. I do have to say that RJ’s isn’t usually that busy.
Coach Fred
Jul 4, 2007 at 10:20 am
That’s tough. Bankruptcy is a major issue and it needs a lot of figuring out in order to cope with it. Hope they could find a way to overcome such problem.
Darrell BorghiCEC
Jul 18, 2007 at 1:16 pm
R.J. needs to do sale /leasebacks on stores. Then target the take home market,catering,and where there are lots of rooftops delivery!To compete with QSR percieved value and quality are the key! Do a seperate menu for outside sales. Good Luck,don’t look back.
Darrell Borghi CEC
Jul 18, 2007 at 1:28 pm
R.J. Gators should do Sale/Leasebacks to generate capital,then go after the take home/catering and where there are lots of rooftops, delivery.To get an edge over QSR’s Target thier guest check average.Have a seperate menu for outside sales .Good Luck and don’t look back!
t
Aug 2, 2007 at 9:50 am
i still work for gators, but i am looking for a new job. mainly b/c i made $11 on a thursday night. but also b/c i know that MOST of the management and def. the owners dont care about us. We all joke about how the doors will be locked on us tomm. and how all of our checks will bounce (they have before)! I personally have gone through atleast 12 diff managers within the last 2 yrs. When will Mr. T realize its prob. him messing up and stop constantly firing management staff?? And since they filed for ch 11 not once have they come and spoken to us about any of this. we find out by news paper! Oh and by all of our hours cut in half bc they bring over employees from gardens and stuart b/c they closed down. Real good ownership mr.t!!!
doug
Aug 8, 2007 at 4:02 pm
It is not a major surprise that this company failed. There has been a major lack of control from the top since the beginning and Mr. T. should know when to look in the mirror to the fact that he has his family in positions of power. He needs to get some good restaurant people in to run the company and send his son back to school for anything other than the restaurant industry. This company has overpromised and underdelivered for too long and now it is paying the price. Mr. T. brags about how he has started three different restaurant companies but in order to do so two had to fail, and now the third one is failing. Can anyone say three strikes and your out. Too high of pricing, too slow of service and not enough staffing are the problems he faces, not the competition. Frankly if the restaurant were run correctly the competition would not matter.
Have an opinion? Leave a comment: