Schlotzsky's chain files for bankruptcy

[Gifted Gourmet]

article from the business section Atlanta Journal-Constitution

Schlotzsky's Inc., a delicatessen franchiser with more than 500 outlets in 36 states and six countries, filed on Tuesday for protection from its creditors under Chapter 11 of the federal bankruptcy laws.  The restaurant chain reported a net loss of $11.7 million in 2003 versus a loss of $199,000 in 2002.

Shape Magazine put our Oatmeal Raisin Cookie at the top of the list in their December issue of the most delicious snacks that "hit the spot without destroying your diet"

seems this didn't help ...

Any of Schlotzsky's dozen-plus delicious sandwiches can be wrapped in a low carb tortilla.

nor this ...

lean smoked ham, Genoa and cotto salamis, melted aged cheddar, mozzarella, Parmesan, signature black olive tapenade, red onion, shredded romaine and iceberg lettuce, roma tomato and mustard. You can eat a great-tasting meal low in carbs at Schlotzsky’s

nor even this ...

even by adding wi-fi, it seems that nothing was able to avert this financial crisis ...

Are you a fan of Schlotzsky's? If your answer is in the affirmative, is this surprising to you? If negative, who is their nearest competitor in your city?

[Dave the Cook]

Any of Schlotzsky's dozen-plus delicious sandwiches can be wrapped in a low carb tortilla.

To me, the draw at Schlotzsky's is the bread, which is an interesting cross between an English muffin and a pita. If their signature ingredient isn't going to pull in sufficient numbers, I don't think replacing it with a tortilla is going to help, especially since the rest of their offering is pretty mainstream. I think they were also doomed by poor strategy for locating stores (they always seem to be in the least convenient spot in their neighborhood), and an advertising message that never settled on one thing long enough to gain a foothold in consumer consciousness.

[FL Heat]

They had them in Dallas when I was in high school (which is probably as soon as mom was willing to fork over money for something more than McD's), and I really liked the chewy bread and the melted cheese and fresh onions you could get on their sandwiches.

Unfortunately, I remember it taking longer to get an order than it did at other "fast food" places, more expensive (though I was willing to pay it), and just not as well-located. When I worked in Minneapolis for a short while, one opened across the street from work, and despite the warm sandwiches and soup they offered on cold, miserable days, I'd say I was probably one of the only "regulars" they had. I think for the general population, they're too expensive for an everyday lunch or fast dinner, and for those who probably WOULD enjoy the food, a sit-down restaurant was a more frequent choice.

Too bad. . .I really do remember loving that chewy, chewy bread, dipping it in their vegetable soup. . .

Diana

[bleachboy]

I really never eat there, but I have thought the sandwiches were pretty tasty whenever I have eaten there. Assuming they're not already closed down, maybe I'll go get one today just for the "swan song" factor. I seem to remember I like their roast beef and cheddar on the chewy bread, with mayo.

[Dave the Cook]

Assuming they're not already closed down, maybe I'll go get one today just for the "swan song" factor.

Yeah, I'm having the same jones.

[alacarte]

this may not be their swan song yet.

Schlotzsky's said operations would continue normally during the financial

restructuring.

I do love their stock ticker: BUNZ

[Gifted Gourmet]

Assuming they're not already closed down, maybe I'll go get one today just for the "swan song" factor.

Schlotzsky's said operations would continue normally during the financial restructuring

Eat up, guys .. their days may be numbered but their carbs sure aren't!

Edit to add: Looks like alacarte and I think alike!

Edited August 4, 2004 by Gifted Gourmet (log)

[foodie52]

I'm still bitter about all the stock I bought years ago and recently unloaded....

I love their restaurants. I know the two very talented women who developed their bakery line. Their restaurants are always crowded. The food is always good.

But their upper level management.....

thanks a LOT, guys.....

[Mild Bill]

I'm a deli lover from way back, but I've only been to Schlotsky's 2-3 times...

I've been let down each time...

With a name like Schlotsky's it's gotta be good, but I've always found then to be too Goyimesque...

Something my skinny wife might make for herself...

The bread is kinda interesting...

They should double the meat and cheese, ask for a few more bucks, and become a real deli...

When a deli sandwich arrives in front of me, the reaction needs to be "come to papa!"

Edited August 5, 2004 by Mild Bill (log)

[Gifted Gourmet]

With a name like Schlotsky's it's gotta be good, but I've always found then to be too Goyimesque...

goyimesque? I haven't heard that term before ... might it have something to do with "portion control"??

from the rest of your post, I derive the fact that you find them to be a bit too "thrifty" on the meats .... "cheap" is too simple a word ... or perhaps,

spartan, abstemious, ascetic, austere, chintzy, close, closefisted, frugal, grudging, illiberal, lean, limited, little, meager, miserly, narrow, niggardly, paltry, parsimonious, penny-pinching, penurious, skimpy, sparing, sparse, stingy, tightfisted, ungenerous ...

yeah, in retrospect, maybe your word said it all .. and much, much better ...

[Richard Kilgore]

Many years ago I used to eat at the first Schlotzsky's, located in South Austin. It was THE sandwich in town, and worth a drive. The bread has always been their real selling point.

[Okbrewer]

I used to eat at Schlotzsky's a lot way back when... But I can count on one hand the number of times I've eaten there in the last 10 years. Even though there is a location not far from my house, it sits directly across the street from Quizno's and my daughter prefers Quizno's! So, guess where we end up!

[chemprof]

I really liked Schlotzsky's, especially back when I was in grad school in Texas in the late '80's (weren't they originally a Texas chain?). When they finally came to NC a few years ago, it was still good, but it seemed like their quality had decreased a little as the chain had increased in size and gone national (i'm sure there's a formula for this somewhere! ).

When the one here opened a few years ago, it was SRO all the time. Then, mysteriously, it closed for about a year. Then mysteriously, a few months ago, it reopened, and when my husband and I drove by the other day, it looked seriously closed, with a for lease sign on the front. I guess this article explains it.

I agree with foodie52, what kind of crack is the management smoking?

Anne

[Gifted Gourmet]

it sits directly across the street from Quizno's and my daughter prefers Quizno's! So, guess where we end up!

Those damned spongemonkies, no doubt! The daughter is under 10, I presume??

weren't they originally a Texas chain?

Yep, chemprof, outta Austin .. and before Dell!

[gwilson]

After reading this thread earlier in the day, I decided to go by and eat for old times' sake. I actually worked at a local Schlotzsky's (on Jimmy Carter in Norcross) for about three years. Because of our location we were packed for lunch Monday through Friday (lots of office parks around), but fairly slow for dinner.

And my supper tonight was good, but I have noticed they've made a few changes. I had two sandwiches - one was the Original, and it tasted like it always did. The other was a Beef & Cheddar, which they actually don't have anymore. I kind of had to make my own. They now have an Angus Beef sandwich which comes with Romaine lettuce instead of Iceburg (but the Original had Iceburg - not sure why the two different types). But regardless the sandwiches were good. And they have new Cracked Pepper potato chips that were really good (I love black pepper anyway).

And as far as the bankruptcy, it's a little bit of a surprise but not much. Almost all of the stores - if not every single one - are franchises. And maybe this is true for that type of set up, or with fast food in general, but there was no corporate prescence. Usually I would be all for that, but there was literally none. Not once did I ever see someone from upper management, a district officer, or anyone like that. And the company went from a loss of $199,000 to a loss of $11.7 million in one year?!?! Something's not right with that.

Oh, almost forgot. As far as competition, I'm not sure how much that had to do with it. (With that big swing in losses.) I know Quizno's has made a huge marketing leap lately. But I refuse to go to one of their stores, because of those @$ monkey things. Yes, I hate them that much. And I did eat there once years ago. It was actually while I was working at Schlotzsky's, and one opened up half a block away (and we didn't notice any less business once the newness wore off). The sandwich was okay, but I don't like bread toasted a lot. And Quizno's toasts the heck out of their buns. I don't like real crunchy bread. And since Subway has been around for so long, I don't think their prescene would affect Schlotzsky's that much. Unless it's that Jared guy. lol

-Greg

[bleachboy]

The wife and I went out to Schlotzsky's this Wednesday afternoon, after I read this thread. We actually went out to run about six errands, one of which was "eat lunch" -- I told her Schlotzsky's, and she agreed.

We drove past the location near Green Hillls mall, and it was closed. The sign said something like "LEA E INFO 555-1212" so I think it might have been closed for a while.

Kind of pissed us both off -- Marissa said, "Damn, Don, after you mentioned Schlotzsky's I really sorta had my heart set on it!" Me too.

I'll try the Opry Mills location tomorrow.

[BrentKulman]

  And the company went from a loss of $199,000 to a loss of $11.7 million in one year?!?!  Something's not right with that.

A little accounting help for you, gwilson:

When a company closes a bunch of locations and/or downsizes, as Schlotzky's did, they will take a large write-off to reflect the costs associated with breaking leases, paying off accrued vacations and other employee severance costs, etc. Oftentimes, they will also use such events as an opportunity to mark down the value of any other assets on their balance sheet that are overstated, such as stale inventory and obsolete equipment.

You would have to dig a little deeper to determine the operating loss that is comparable to the $199,000 loss in the previous period and the financial statements that would enable you to make that determination have not yet been released based on my quick review of their SEC filings.

[rlm]

I never cared much for Schlotzsky's until I ate at the "mega-sized" one in Austin on Lamar with the bakery. The quality and service seemed better there. I haven't been to one since I moved away from Austin five years ago. I've seen them in Colorado, but they don't even cross my mind as an option.

[Gifted Gourmet]

I haven't been to one since I moved away from Austin five years ago. I've seen them in Colorado, but they don't even cross my mind as an option.

And now they are in Chapter 11 .... as the comedian Gilbert Gottfried says in one of his routines, "You happy now??" the guilt, oy!

He goes on to tell how his parents loaded a ton of guilt on him with that phrase ... ie. "You happy now that you caused World War II, you happy?" "You, the Titanic sunk, you happy now??" ..

well, considerably funnier when it comes out of his mouth .. with that voice ...

[nessa]

I for one am very sad that they are going under. As far as I'm concerned, they are the only fast food sandwich worth eating. Ok, with the exception of one of the Thundercloud's subs. Veggie Delight or something like that.

Damn and double damn I'm gonna miss that bread.

[herbacidal]

When a company closes a bunch of locations and/or downsizes, as Schlotzky's did, they will take a large write-off to reflect the costs associated with breaking leases, paying off accrued vacations and other employee severance costs, etc. Oftentimes, they will also use such events as an opportunity to mark down the value of any other assets on their balance sheet that are overstated, such as stale inventory and obsolete equipment.

You would have to dig a little deeper to determine the operating loss that is comparable to the $199,000 loss in the previous period and the financial statements that would enable you to make that determination have not yet been released based on my quick review of their SEC filings.

Yes, when looking at financial statements, you always want to compare operating income rather than net income for profit or loss.

There's numerous one-time occurences (bankruptcy being about as serious a one-time occurence as you can get) that affect the net income that can inflate the perception of both profit and loss.