Southern Concepts Restaurant Group Inc., which once planned up to 40 restaurants nationwide under the names Southern Hospitality, Bourbon Brothers and Carve Barbecue, closed its last three restaurants in the Denver area on Monday, shutting down the based chain. in Colorado Springs.
The company ceded its Colorado Springs site in April to Owner, a limited liability company run by JW Roth, who converted the Northgate-area restaurant to the Bourbon Brothers Southern Kitchen Concept under which it previously operated before stop by the Southern Hospitality restaurant. and bar concept.
Roth said he reduced the restaurant’s rent by 8,000 square feet in October, but Southern Concepts was unable to generate enough revenue from his restaurant and owed $ 114,000 in unpaid rent.
âI hated doing it, but I had to kick them out and convert it back to Bourbon Brothers because I own all of the trademarks of that name and concept. profitable since then, âsaid Roth, who is also a significant shareholder of Southern Concepts and its largest creditor. “It looks to me like they’re just going to close their doors. It’s a shame we’ve come to this. I’m sick of it. But it’s another day and we’re leaving here. At the end of the day I ended up with a restaurant winner. “
Southern Concepts CEO Jim Fenlason said Thursday the company “couldn’t raise the capital and didn’t have the sales to continue” to operate restaurants in Denver. An eviction notice had been posted on the company’s lower location in downtown Denver, alleging that Southern Concepts was behind on a rent of $ 181,000, but Fenlason said the company had surrendered all of them. Denver locations to owners. He said a lawsuit by Shamrock Foods alleging the company owed $ 50,000 was taken out and company officials were working on a plan to deal with the remaining debts.
The closures come less than a month after Southern Concepts shareholders overwhelmingly rejected plans to sell all three restaurants, two of which to a company controlled by Fenlason, in exchange for a 10 percent cut in future profits, according to documents filed by the company with the Securities and the Foreign Exchange Commission. Fenlason said last month that Southern Concepts had not received further offers for its two Southern Hospitality locations and that the proposed deal with his company would have required further negotiations.
Fenlason, who had previously been non-executive chairman of Southern Concepts, became the company’s CEO and CFO in August after Mitchell Roth, son of JW Roth, resigned as CEO and Heather Atkinson as CFO. He immediately initiated a restructuring to save $ 400,000 per year in management fees also by laying off the company’s COO, allowing the company “to allocate more resources to marketing and concept development. “, according to a press release from Southern Concepts issued a few weeks after he became CEO. .
Southern Concepts was hemorrhaging cash by the time Fenlason became CEO, according to the latest financial report the company filed with the SEC for the first nine months of last year.
The company lost $ 2.77 million, or 4 cents per share, on revenue of $ 5.57 million, a slight improvement from the loss of $ 2.86 million, or 5 cents per share, on revenue of $ 4.79 million in the same period a year earlier. However, the company’s cash flow fell from $ 1.11 million to $ 65,822 during the same period, when it owed nearly $ 450,000 in accounts payable and accrued liabilities.
Just two and a half years earlier, company officials had opened the Colorado Springs restaurant as Bourbon Brothers near the Bass Pro Shops store in the Polaris Pointe business development and said they planned to do so. develop 40 more across the country over the next five years, including a downtown Colorado. Location of sources. The company merged with the operators of a Southern Hospitality facility in lower downtown Denver and then opened a location in Lone Tree and a Carve Barbecue location in Glendale, but Fenlason said all three locations were losing ground. money when his company offered to buy them in May.
The first Southern Hospitality restaurant opened in New York in 2007 with the support of actor and musician Justin Timberlake and still operates under separate ownership. The Denver site opened in 2012 with the support of Ryan Tedder, singer of Colorado band OneRepublic, and his father, Gary Tedder.
âI was asked to come in, look around and see what I could do to make an impact on restaurants. I looked for ways to cut costs and found something that we could do, âFenlason said last month.
“The cost of real estate made it difficult to expand and add more restaurants. It certainly made a difference.”
Roth loaned $ 1.25 million to Southern Concepts in October, extending and expanding a loan with a Denver company, to keep the business afloat, but says he will now cancel the loan rather than accept. a deal that would convert debt into stocks that trade at less than 1 cent a share.
âTwo and a half years ago I thought it was the best thing and made an investment. I loved the management team and the concept. I didn’t have the time to devote to the company, so I didn’t run for board election, so I watched from the outside as an investor and primary creditor, âsaid JW Roth.â Two things hurt the company. ‘business. The real estate market has made it difficult to rent good real estate at a rate that would allow you to make a profit. Plus, the celebrities who’ve been promoted to face the restaurant and help drive sales, we’ve never seen them. “
Roth said he didn’t blame Fenlason for Southern Concepts’ collapse, although he opposed his offer to buy the restaurants without putting all three up for auction.
“Looks like he tried to calm down as best he could, and he was honorable in the way he treated us.”
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