Boston Chicken Files Chapter 11
DENVER (AP) _ Five years after going public in a frenzied stock offering, Boston Chicken Inc. filed for Chapter 11 bankruptcy protection Monday and closed 178 stores.
The restaurant chain said it sought court protection because of about $283 million in debt that comes due Oct. 17.
Boston Chicken and its homestyle Boston Market restaurants created a Wall Street sensation in 1993. Its initial public offering was priced at $20 per share and shot to nearly $50. The stock split 2-for-1 in 1994.
The stock has since plummeted, trading at 43 1/4 cents, down 31 1/4 cents Monday afternoon on the Nasdaq Stock Market.
Some analysts said the Golden-based company had expanded too quickly and lost focus.
Between May 1992 and this year, Boston Chicken grew from 34 stores in the Northeast to 1,143 nationwide. Sales jumped from about $21 million in December 1991 to nearly $1.2 billion in 1996.
Along the way, meatloaf and ham were added to the chicken and mashed potatoes on the menu. The company also invested in a bagel chain.
After years of growth, Boston Chicken posted mixed sales in 1997. Analysts noted that the company was expanding too aggressively and lost its focus. This spring, the company’s co-chairmen stepped down.
Jerry Hirschberg, who tracks Boston Chicken for Standard & Poors, said ``a lot of people were taken with the concept″ at first. But he said the company’s subsequent strategy seemed to be: ``Put up a thousand or so stores, then figure out how to run them.″
Chapter 11 allows a company to hold off its creditors while it tries to put its finances in order.
The company said nearly all of the 18,500 employees at the 178 stores being closed will be relocated.