Planet Hollywood Closes 9 Sites, Including in Santa Ana

Hoping to end its bankruptcy drama as a smaller but profitable company, Planet Hollywood International closed nine of its company-owned restaurants Monday, including one in Santa Ana.

Robert Earl, the co-founder and chief executive of the movie-themed chain, said he hopes a new Orange County location will replace the “underperforming” restaurant across from South Coast Plaza.

Earl said the chain would like to open a restaurant in Anaheim, an apparent reference to Downtown Disney, the entertainment mall Walt Disney Co. plans to open next to Disneyland in 2001.

Planet Hollywood had owned 32 U.S. restaurants before the closures, which are part of a prepackaged reorganization worked out with its creditors. The chain, which announced in August that it would pare unprofitable sites, said it will make its formal Chapter 11 filing today in U.S. Bankruptcy Court in Delaware.

In addition to the Santa Ana restaurant, Planet Hollywood closed restaurants in Chicago; Fort Lauderdale, Fla.; Gurnee, Ill.; Houston; Indianapolis; Maui, Hawaii; Miami and Phoenix.

One or two more sites could be closed depending on negotiations to win more favorable terms from landlords, Earl said. He would not say if one is Beverly Hills, where the company has complained that it is hampered by a city prohibition on late-night liquor sales. The company’s other California restaurants, in San Francisco and San Diego, apparently are unaffected.

Despite backing from celebrities such as Bruce Willis, Arnold Schwarzenegger and Sylvester Stallone who received stock in return for promotional work, the chain has suffered from declining sales at many locations. Sales of Planet Hollywood T-shirts and other merchandise, which account for a quarter of revenue, have also fallen.

The Orlando, Fla.-based chain also is selling peripheral businesses such as its sports-themed All Star Cafes. It has also lined up a $30-million cash infusion from its largest shareholders, Saudi Arabian Prince Alwaleed bin Talal and Singapore billionaire Ong Beng Seng, and a trust fund benefiting Earl’s children.

Before the cuts, Planet Hollywood owned and operated 48 restaurants around the world, with franchisees operating 32 more. The Santa Ana restaurant was the second in the nation when it opened in 1992, after one in New York.

“It was a tremendous success for the first three years, but when they started building the ones in San Diego and Beverly Hills, it drew from ours,” said the original franchisee, Frank DiBella. “They were just too close together.”

DiBella sold the restaurant to Planet Hollywood two years ago.

Planet Hollywood went public at $18 a share in 1996 and traded as high as $28.50. Trading was suspended in August with the share price at 75 cents.