Five years after going public in a frenzied stock offering, Boston Chicken Inc. filed for Chapter 11 bankruptcy protection Monday and closed 15 percent of its stores, including six of the 11 Boston Market restaurants along Utah's Wasatch Front.
The restaurant chain, which closed 178 stores, said it sought court protection because of about $283 million in debt that comes due Oct. 17.Boston Chicken and its homestyle Boston Market restaurants created a Wall Street sensation in 1993. Its initial public offering was priced at $20 per share and shot to nearly $50. The stock split 2-for-1 in 1994.
The stock has since plummeted, closing at 50 cents Monday on the Nasdaq Stock Market, down 25 cents.
The six Utah restaurants that have closed are at 4835 S. Highland Drive, Salt Lake City; 5892 South State, Murray; 5575 South Redwood Rd., Taylorsville; 60 Est 10600 South, Sandy; 1293 East Draper Parkway, Draper; and 1083 West Riverdale Rd., Riverdale.
Some analysts said the Golden-based company had expanded too quickly and lost focus.
Between May 1992 and this year, Boston Chicken grew from 34 stores in the Northeast to 1,143 nationwide. Sales jumped from about $21 million in December 1991 to nearly $1.2 billion in 1996.
Along the way, meatloaf and ham were added to the chicken and mashed potatoes on the menu. The company also invested in a bagel chain.
After years of growth, Boston Chicken posted mixed sales in 1997. This spring, the company's co-chairmen stepped down.
Jerry Hirschberg, who tracks Boston Chicken for Standard & Poors, said "a lot of people were taken with the concept" at first. But he said the company's subsequent strategy seemed to be: "Put up a thousand or so stores, then figure out how to run them."
Chapter 11 allows a company to hold off its creditors while it tries to put its finances in order.
The company said about 2,700 of more than 18,500 employees would be transferred with the store closings. About 500 employees, mostly hourly workers, would lose their jobs; those employees will be offered severance pay and help finding other work.