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Bankruptcy shutters 56 Village Inns

Filing by Vicorp spells end of four Colorado outlets

David Milstead and Joyzelle Davis

Published April 3, 2008 at 10:02 a.m.
Updated April 3, 2008 at 11:53 p.m.

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The Village Inn at 222 Columbine St. in Cherry Creek is among four Colorado properties closed Wednesday by Vicorp Restaurants, the chain's parent company, which is filing for bankruptcy.

Photo by George Kochaniec Jr. / The Rocky/2007

The Village Inn at 222 Columbine St. in Cherry Creek is among four Colorado properties closed Wednesday by Vicorp Restaurants, the chain's parent company, which is filing for bankruptcy.

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The parent of Village Inn yielded to the weakening economy and its heavy debt, filing for bankruptcy and closing 56 restaurants across the country.

In Colorado, four of the company's 54 restaurants shut down Wednesday, including one on Columbine Street in Cherry Creek.

Denver-based Vicorp Restaurants hopes to stay alive through its Chapter 11 petition, keeping its remaining 343 Village Inn and Bakers Square restaurants open. Chief Executive Ken Keymer called the bankruptcy filing "both prudent and necessary."

"Although we have already taken many steps to address the challenges we face, these steps were not enough to allow us to address our substantial debt obligations," he said in a statement.

The company estimates it has between 5,000 and 10,000 creditors, and owes $131.1 million to its 20 biggest. That includes $126.5 million to its lenders. It has more than $100 million in assets, it estimates in its filing.

The slowing economy and higher prices for everything from gas to supermarket staples has pinched high- and lower-end restaurants alike. Italian family dining chain Buca di Beppo and coffee shop Tully's Coffee Co. in recent months have hired bankers to help them review their options, including reorganization or a sale.

Vicorp has special challenges. The company, which caters to lower-income consumers, has said it was hurt in 2007 by rising gas prices and its customers' hesitancy to go out to eat as often.

During the quarter that ended in July 2007, the company reported a net loss of $5.66 million, compared with a net loss of $581,000 in the comparable period of 2006. EBITDA, or earnings before interest, taxes, depreciation and amortization, of $5.58 million wasn't high enough to cover $6.65 million in interest expense.

Vicorp planned to close a number of its underperforming stores and remodel others. But the remodeling program hasn't gotten beyond the prototype stage because of the company's lack of spending power.

While the economy "is probably a contributing factor, my sense of things is that this is mostly about their debt," said John Imbergamo, a Denver-based restaurant consultant.

"They've been in this fight for several years now over their debt structure and perhaps the additional economic pressures that have kicked in over the past six months have pushed them over the edge," he said.

Vicorp went private in 2001 in a leveraged buyout. Southfield, Mich.-based private-equity firm Wind Point Partners owns a majority of its stock.

Vicorp's existing lenders have agreed to provide $60 million of what's called "debtor-in-possession financing," which is a new line of credit that will enable the company to keep operating.

The people owed money for past obligations - the lenders, suppliers, landlords and employees - will have to wait for the company to work its way through Chapter 11.

Restaurant consultant Imbergamo said Vicorp, which traces its roots to 1958, has "never been a trendsetter in the restaurant business. They've always been kind of the steady Eddies."

"They're going to survive this," he added. "Chapter 11 is actually the perfect thing for them in terms of restructuring their debt. It's designed for just this kind of event."

Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.

Colorado closures

Denver 222 Columbine St.

Parker 9205 Crown Crest Blvd.

Lakewood 11903 W. Sixth Ave.

Colorado Springs 8050 N. Academy Blvd.

Carrying on

Vicorp says its remaining 343 Village Inn and Bakers Square restaurants expect to:

* Operate their normal schedules with a full menu and service staff as usual (times and locations can be found at vicorpinc.com)

* Take and fulfill pie orders

* Honor coupons, gift cards and certificates as usual

* Provide employees wages, health care coverage, vacation, sick leave and similar benefits without interruption

* Pay suppliers for goods and services received during the reorganization process.

* Information: For questions about pie orders, gift cards and gift certificates purchased from closing Village Inn or Bakers Square restaurants, go to villageinn.com or bakerssquare.com or call customer service at 1-866-304-8271.

Comments

  • April 3, 2008

    12:48 p.m.

    Suggest removal

    italiaboy9 writes:

    Their food is edible, it's their image that sucks.

  • April 3, 2008

    1:26 p.m.

    Suggest removal

    LTWonder writes:

    Rising gas prices didn't kill their business, their new menu did.

  • April 3, 2008

    3:55 p.m.

    Suggest removal

    Squatch writes:

    their chicken fried steak and eggs is yummy I get the side of pancakes and a mountain dew. I beeter get there tonight before they close my favorite inn.

  • April 3, 2008

    4:14 p.m.

    Suggest removal

    Squatch writes:

    most likely made a comment about illegals working there and thats why they are going bankrupt.

  • April 3, 2008

    4:20 p.m.

    Suggest removal

    MtnRooster writes:

    This could be bad for the Boulder Sausage Company because Village Inn carries the brand.
    I bet the property alone at the now closed Cherry Creek location is worth over $1 million.

  • April 3, 2008

    4:28 p.m.

    Suggest removal

    maukaman writes:

    I thought there was more dough in that business.

  • April 3, 2008

    6:10 p.m.

    Suggest removal

    The_Punnisher writes:

    They didn't happen to mention the fact that they hired ILLEGAL ALIENS at some of their places.

    They couldn't even make a profit with that unfair ( and ILLEGAL ) advantage?

    Their money management must have really sucked.

  • April 3, 2008

    6:24 p.m.

    Suggest removal

    gkb2008 writes:

    Anytime I went into one for a meal, there was a lot of penny pinching oldsters in the place. Not often did you see families, or young people, except after midnight after the bar scene was starting to wrap up. I guess they had some families on Sundays after church but the collapsing economy is forcing everybody to tighten their expenses, and full service restaurants are at the top of the list. Instead of spending $6o for a family of four at VI, that family can spend less than $20 at McDonalds or BK and get similar quality food without all the frills. The chain will probably completely disappear within the next few years.

  • April 4, 2008

    5:59 a.m.

    Suggest removal

    gwats writes:

    They do serve good food and my small family has enjoyed our meals there over the years. Unfortunately, most working -class folks don't have time for a nice sit down meal @ Village Inn. I think I'll MAKE the time and take my Bride to VI next week.

  • April 4, 2008

    6:04 a.m.

    Suggest removal

    Pagen writes:

    What comes around goes around! They treat employees like crap and they take away all our incentives. They let managers hire illegals and replace those of us who have worked hard for them for years. They don't care about our hard work so I don't care what happens to them, they deserve is especially the upper management. One more thing the smoking ban hurt them bad and they don't admit it! They spent way to much money and try to fix something that wasn't broken. Village Inn used to be a great company but since the first time they were sold in the late 90's they have gone down hill. I hope they replace some of their upper management so they can see what it is like being unemployed. Actually some of their store managers too, like the one at I-70 and Kipling and the one at I-70 and Federal!

  • April 4, 2008

    10:43 a.m.

    Suggest removal

    R8R_H8R writes:

    So all these business's that they owe millions of dollars to are s.o.L.... that's great. What a class thing to do. Erase millions they owe, 'sorry guys!', then stay in business. What a load!

  • April 4, 2008

    12:52 p.m.

    Suggest removal

    mani writes:

    Chapter 11 is not a write off of debt. It is a plan to pay back debt in a structired manner under court supervision. It requires a review of the existing debt and a review of the business plan for how the repayment stucture is designed. Chapter 7 is the only way to write off debt. You do not usually get to stay in business after a Chapter 7

  • April 4, 2008

    12:57 p.m.

    Suggest removal

    redwhiteandBLUE writes:

    Gkb,
    Maybe, a lot of families now go to buffet restaurants, because of the economy, like Golden Corral, Furr's and country Buffet or even Cinnzetti's.
    Pagen, Oh yea, I hope things worked out for you.

  • April 4, 2008

    1:07 p.m.

    Suggest removal

    outtahere writes:

    worked at "vicorp" for many years. good place until the second group of new owners came in, who incidentally know nothing about the restaurant business - just out to make a buck. oh the stories i could tell. and the woman they had in charge - what a joke! she got her just desserts when they let her go last year. ha ha, she'll never work in the restaurant business again, she's a laughing stock in the industry - you should hear the stories the big boys tell, its great. its unfortunate to see the damage she and the new owners have done to a restaurant concept that "was" an icon, a concept that should have been around forever. absolutely no excuse for what has happened.

  • April 4, 2008

    3:05 p.m.

    Suggest removal

    boget writes:

    What will "The Pie Lady" do now??

  • April 4, 2008

    4:45 p.m.

    Suggest removal

    musicman80 writes:

    Village Inn was the bomb... alrighty, everyone over to IHOP!