Chi-Chi’s, Koo Koo Roo Enter Bankruptcy Court

Times Staff Writer

Specialty restaurant chains Chi-Chi’s and Koo Koo Roo filed for bankruptcy protection Wednesday, and their parent company said Fuddruckers Inc. had offered to buy Koo Koo Roo for $4 million.

The Chapter 11 filing in Delaware came 15 months after the parent company, Irvine-based Prandium Inc., emerged from its own bankruptcy proceedings and less than two months after a deal to sell the company for $6.4 million fell through.

A dozen East Coast affiliates also filed for Chapter 11 protection. As of June 29, Prandium had more than 160 restaurants in 21 states.


Chi-Chi’s President Anthony Baril said in court papers that Chi-Chi’s and Koo Koo Roo “are burning cash at a rate that will result in them running out of free cash in the next five to seven business days.”

Chi-Chi’s and Koo Koo Roo plan to sell their assets while in bankruptcy proceedings. For Koo Koo Roo, the offer from Fuddruckers, a Beverly, Mass.-based chain with restaurants in 30 states, would be the minimum bid.

In its filing, Mexican food chain Chi-Chi’s listed assets of $50 million to $100 million and debts of more than $100 million. Koo Koo Roo, with 28 restaurants serving rotisserie chicken and roast turkey dishes, said that both its assets and liabilities were less than $10 million.

As of June 29, Chi-Chi’s had 123 units, down from 139 two years ago, and Koo Koo Roo had 28, down from 38 in 2001.

While other restaurant chains have found success in both the chicken and Mexican restaurant segments, Prandium’s chains have suffered from sagging sales.

For the first half of the year, Chi-Chi’s sales fell 13%, to $86.1 million compared with the year-earlier period, while Koo Koo Roo sales dropped 11%, to $35.4 million. Prandium also suffered an operating loss of $4 million for the first half of the year.


In February, the company hired turnaround experts Alvarez & Marsal Inc. for $165,000 a month and installed Hugh G. Hilton as Prandium’s interim chief executive.

Prandium also owns the Hamburger Hamlet chain, which has 14 locations. Hamburger Hamlet sales fell 2% to $15.5 million for the six months ended June 29.

Shares of Prandium, which trade over the counter, lost 2 cents Wednesday to close at 21 cents.


Bloomberg News was used in compiling this report.