Long John Silver’s shuts two LV restaurants

Brian Seals

Wednesday, Aug. 26, 1998 | 11:09 a.m.

Two Long John Silver's Seafood Shoppe restaurants in Las Vegas, on East Tropicana and West Sahara, closed this summer as the company struggled to erase its huge debt.

The Lexington, Ky., company filed for Chapter 11 bankruptcy reorganization in June.

The closing of the two Las Vegas stores leaves the city with four Long John Silver's. Company spokesman Bruce Hinton said the closings were not part of bankruptcy reorganization, but were part of a separate plan to move the company towards profitability.

About 74 of the company's 1,300 restaurants were closed nationwide in June. The firm averages about 18 employees per store and about 60 percent of the employees were relocated, Hinton said.

"We started last December evaluating all of our markets and evaluating which restaurants were unprofitable," Hinton said.

Meanwhile, the company is still pursuing a plan to pay down debt it acquired in 1989 as it converted from a public company to a private entity controlled by a group of investment firms led by Castle Harlan. C.S. First Boston Corp. now owns the chain.

The company spun off several other of its restaurant chains, including Fazoli's fast food Italian restaurants.

Long John's was bought for $650 million, which included high-interest debt.

"It's like buying your house with a Visa card," Hinton said.

Since then, $200 million has been paid to creditors. The company now owes $420 million, half of which it hopes to eliminate through bankruptcy reorganization. Hinton said the company hopes to be out of bankruptcy protection by January.

The company needs to increase cash flow to refurbish its restaurants and expand its menu offerings. Though it may be a victim of the times -- the battered, fried foods have somewhat fallen out of favor in the more health conscious '90s -- the company will cling to that primary product.

"We will neve abandon batter-dipped fish, that made us where we are," Hinton said.

It is, however, expanding its grill menu. Hinton said new grilled items are being tested in markets in Texas aimed at people who refuse to eat the battered product.

"It takes away their veto vote on our restaurants," Hinton said.