Babalu Tapas & Tacos Shutters Three Locations, Declares Bankruptcy
Eat Here Brands, the restaurant group that owns Babalu Tapas & Tacos, filed for Chapter 11 bankruptcy protection on July 30. The company, which now operates six Babalu restaurants and Table 100 in Flowood, Mississippi, cited declining sales as one of the reasons for filing for bankruptcy.
Over the last decade, Eat Here grew the Babalu brand to nine restaurants in five Southern states. Expansion ramped up in 2017 when the brand opened four stores in Atlanta; Chapel Hill, North Carolina; East Memphis, Tennessee; and Lexington, Kentucky.
Documents reveal Babalu’s troubles began in 2018 when Eat Here closed the Charlotte location due to weak revenue, reported WMC Action News 5.
The group decided to file for bankruptcy as “the strain of rent expense at locations with no operating revenue, the loss of portions of their senior management team, significant debt service obligations, and declining cash flow,” continued to pile up, WMC Action News 5 reported.
Before the bankruptcy filing, the Chapel Hill and Lexington restaurants recently closed.
“According to the court filing documents, this rapid growth strained Eat Here’s resources and led to increased turnover and inconsistent operations,” reported WMC Action News 5. The new locations, three of which opened within four months of each other, returned disappointing results and failed to meet the Atlanta-based company’s expectations.
Eat Here said in a statement to the Memphis Business Journal:
"We will be working with creditors to restructure our debt, and to eliminate unproductive leases for locations we did not move forward with. There are no plans to close any of our restaurants in the future and guests should expect to enjoy a unique dining experience. All of our businesses are profitable, and we will continue to strengthen all of our restaurants by hiring for all open positions and providing marketing support. We look forward to emerging with a renewed passion for the brand principles we were founded on and continued growth of the Babalu concept."
The six remaining locations will continue to stay open and operate normally.
Eat Here Brands marketing director Stacey McMinn told the Knoxville News Sentinel, there would be no disruption in employee pay checks as a result of the bankruptcy filing.
"We all will be working hard to keep our staff informed," McMinn said. "We have been completely transparent from the top down and have had round tables and FAQ for our folks to ask questions or express concerns. We will continue to do that."