Health Guidelines Pose Latest Challenges for All-You-Can-Eat Buffet Chains
By Lou Hirsh CoStar News
May 9, 2020 | 06:29 AM
The coronavirus pandemic has dealt another blow to the nation’s already-struggling buffet-style restaurants, with the parent of the Souplantation and Sweet Tomatoes chains reportedly deciding to permanently close all 97 locations.
Garden Fresh Restaurants, which has operated the nationwide chains for the past 42 years and emerged from Chapter 11 bankruptcy in 2016, has decided to make the coronavirus-related closures of mid-March permanent. Executives at the San Diego-based company said state and federal social-distancing and other health guidelines are expected to prevent the operation of all-you-can-eat buffet formats for the foreseeable future.
“The [Food and Drug Administration] had previously put out recommendations that included discontinuing self-serve stations, like self-serve beverages in fast food, but they specifically talked about salad bars and buffets,” Garden Fresh CEO John Haywood told the San Diego Union-Tribune on May 7.
“The regulations are understandable, but unfortunately, it makes it very difficult to reopen,” Haywood said. “And I’m not sure the health departments are ever going to allow it.”
Officials of Garden Fresh, which employs 4,400 nationwide, did not immediately return requests from CoStar News for comment.
“This is not really a good time to be operating these kinds of salad-bar restaurants, and those companies that were already on the bubble are going to be struggling now with the coronavirus,” Darren Tristano, CEO of restaurant consulting firm FoodserviceResults in Chicago, told CoStar News. “Everybody is a germophobe now.”
Tristano said the current situation will have restaurants and many grocery stores, such as Whole Foods, rethinking their current self-serve food operations, replacing food bars with more prepackaged items or designated food preparation stations where employees make meals for individual customers. Buffet-focused chains such as Golden Corral and Sizzler have previously deployed the food-station strategy on a limited basis.
While the coronavirus is not transmitted through eating, health officials are concerned that people in buffet lines can contract COVID-19 from others in line, and also from touching utensils and surfaces harboring the virus.
The FDA issued guidelines in March recommending the discontinuation of self-service buffets and salad bars until local health departments decide to lift social distancing and sanitation protocols geared to the pandemic. In health guidelines issued earlier this week for hotels and other hospitality businesses, the state of California recommended that operators discontinue buffet-style food offerings.
All-you-can-eat dining chains had already been in decline well before the pandemic, as consumers turned to healthier foods and practiced portion control with their meals.
According to research firm The NPD Group, the number of buffet restaurants in the U.S. declined by 26% between 1998 and 2017, even as the slate of total restaurants grew 22%.
Other national companies that have struggled in the buffet category include Ovation Brands, parent of Old Country Buffet, which filed for bankruptcy three times since 2000; and Metromedia Steakhouse, parent of the Ponderosa and Bonanza chains, which filed for bankruptcy in 2008 and later sold the chains to FAT Brands.
Garden Fresh went through several management and format changes over the years, and had recently been getting financial help from Perpetual Capital Partners, the Washington, D.C.-based private equity firm that purchased Garden Fresh Restaurants out of bankruptcy in 2016.
A Perpetual Capital executive told the Union-Tribune that the investment firm five weeks ago supplied Garden Fresh with $2.5 million to help cover what would turn out to be the final payroll, but executives determined that it would not be feasible to reopen, even with federal stimulus money available. Another bankruptcy filing by Garden Fresh is possible, and the company has engaged legal counsel to evaluate options to meet obligations including unpaid rent at leased locations, the executive said.
Dining rooms at most U.S. restaurant chains remain closed, with companies offering only pickup and delivery services, but several states have begun opening dining rooms under restricted capacities and social distancing rules. California is expected to join the ranks of those states soon, with officials releasing guidelines within the coming week.
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