Ignite Restaurant Group Reportedly on Verge of Bankruptcy
Ignite Restaurant Group, parent company of Joe’s Crab Shack and Brick House Tavern, could be on the verge of bankruptcy, according to Bloomberg, which cited “people familiar with the matter.” The article reported that the company was preparing to file as early as this week.
In March, Ignite’s board of directors announced that a process was underway to pursue the sale of the business, “which could be sold as an entirety or through the separate sales of its two restaurant brands.”
Chief executive officer and board director Robert S. Merritt also revealed that he was stepping down from both positions. The sale was expected to go through Piper Jaffray Cos. According to Bloomberg’s sources, both strategic and private equity buyers are considering purchasing the company out of bankruptcy.
Ignite Restaurant Group announced earlier this week that Debra Eybers, who began serving as interim COO in November, was named to the position permanently, officially replacing David Catalano, who resigned in July. A filing with the Securities and Exchange Commission shows she will receive a base salary of $300,000 and a target bonus of 50 percent of her base salary. Eybers founded Cheeseburger in Paradise and served as its president from 2000—2006. She was also president of House of Blues and a consultant for several companies, including Ruth’s Hospitality Group.
Ignite’s sales have sagged in recent reports. The second quarter showed a 6.8 percent drop in comparable restaurant sales at Joe’s Crab Shack and a 6.3 percent fall at Brick House, year-over-year. Revenue also declined 8.7 percent to $130.8 million.
In 2016, Ignite’s revenue decreased 8.5 percent compared to 2015. Joe’s Crab Shack’s revenue was down around 11.5 percent for the year. Brick House reported an 8.1 percent comparable sales decrease.
As of January, Ignite operated 112 Joe’s Crab Shacks and 25 Brick House Taverns. The company sold 150-unit Romano’s Macaroni Grill to Redrock Partners LLC in 2015 for $8 million in cash after buying it for $55 million two years prior.