Falling profits and ongoing litigation have forced Rodizio Restaurants International Inc. to file for Chapter 11 bankruptcy protection.
The Brazilian cuisine restaurant chain, featuring gauchos with spikes of grilled meats and vegetables, opened its first location in Littleton, Colo., in 1995. Five more restaurants followed, including two in Utah, located at Trolley Square in Salt Lake City and University Mall in Orem.
But a slow economy prompted the Draper-based company to close its Littleton restaurant last month. A second restaurant, yet to be announced, will be closed in mid-January, said Ivan Utrera, president of Rodizio Restaurants International Inc.
Utrera said the company has experienced an 18 percent drop to date in revenue over 2001.
In addition, a protracted lawsuit against its main competitor, Tucanos, has cost the company roughly $700,000 in legal fees.
"If you look at the operations themselves, we operate with a net profit, but the litigation itself is what has dragged this down," Utrera said.
Utrera started the company with a group of Brazilian capital investors. In 2001, the chain witnessed $13 million in revenues. Utrera expects that to drop to between $10 million to $11 million this year.
"That hurts," Utrera said. "Especially with all this baggage and loans. The company has about $2.5 million in debt."
In addition to its ongoing litigation, Rodizio was ordered by a Colorado court to pay $137,638 in past-due rent at its Greenwood Village, Colo., location.
In spite of the company's financial troubles, Utrera said the remaining restaurants will continue to operate.
"We are operating more efficiently than ever before, even better than industry average, but it was not enough to overcome these adverse conditions," he said. "We have to swallow the bitter pill, so we can get healthy again."
E-mail: danderton@desnews.com