Of the 89 Marie Callenders restaurants still open in the U.S., 74 are in California.… (Fred Prouser, Reuters )
The parent company of Marie Callender's restaurants, which have been part of the Southern California landscape since 1964, has filed for bankruptcy protection and closed 31 locations nationwide.
Memphis, Tenn.-based Perkins & Marie Callender's Inc. — which also owns the far larger Perkins Restaurant & Bakery chain — blamed economic conditions in California and Florida, where many of its restaurants are located, for a sharp decline in sales.
"With overall unemployment rates at record high levels, discretionary income for many historically loyal customers and other consumers has been severely constrained," the company said in its bankruptcy filing Monday.
The company closed the targeted Marie Callender's restaurants Sunday. Among them were 13 California locations, including one at the Promenade at Howard Hughes Center mall in Los Angeles and another in Simi Valley, said Perkins & Marie Callender's spokeswoman Vivian Brooks.
Of the 89 Marie Callender's restaurants still open in the U.S., 74 are in California.
The Perkins restaurants are primarily in the Midwest and Florida. The company closed 27 of them on Sunday; 448 remain open.
According to the court filing, 2,500 jobs nationwide will be cut as a result of the restaurant closings and other actions. Brooks declined to comment on how many positions were likely to come from the California workforce.
Once the restructuring is complete, private equity firm Wayzata Investment Partners, based in Minnesota, will take over majority control from current owner Castle Harlan, according to a statement by Perkins & Marie Callender's. The restructuring is scheduled to be completed by Oct. 21.
Marie Callender's was founded in Long Beach in 1948 as a wholesale pie business catering to restaurants. The first restaurant opened in Orange in 1964.
New York private equity firm Castle Harlan bought the chain in 1999 and merged it with Perkins Family Restaurants in 2006.
While competitors built new restaurants and upgraded existing ones in recent years, the company lacked the money to remodel and allowed many locations to become "dated and stale," losing traffic to other eateries, the court filing said.
Aqeel Merchant, a restaurant analyst at investment firm Knight Capital Group, said the company failed to evolve to meet the tastes of diners. It dropped the ball, he said, at a time when competitors such as Denny's and lower-priced alternatives like McDonald's were hurrying to provide a more hip and healthy place to eat.
"It is an old-fashioned chain," Merchant said, "but they could have done just fine if they invested in more R&D, added new items like salads to their menus and had the money to upgrade."
At a Marie Callender's in Pasadena on Monday, longtime patron Grant Hangen, 40, said some of the locations in Los Angeles had begun looking "scruffy." He recalled when the Pasadena location also offered games and other amusements.
"There used to be an arcade upstairs, and it was a great place to throw a party," said Hangen, a mechanic who has been going to the same Marie Callender's since he was a teenager. "It's become a little bit run-down."
Mark Strasbugh, 50, was also having breakfast there Monday morning. He had also come to consider the place a neighborhood touchstone.
"It's a family restaurant and it feels like home," Strasbugh said. "It's peaceful and quiet, and the pies are great."
The Pasadena resident said he has been frequenting the chain since he was a boy.
"It's not Denny's, after all," he said. "This is Marie Callender's. It's a part of my environment."
But it has not been a healthy business environment for the company since 2005, Merchant said, when it took on too much debt when acquiring the Perkins chain.
"It's hard in a recession to pass along rising food costs to consumers," he said. "Once earnings started to decline, the debt load was too much to handle."