Sure, the first part of the year has been littered with a number of retail bankruptcies, but it wasn’t long ago that several restaurant chains were dealing with similar financial issues. Now, it appears we’re revisiting that trend: A year after it’s failed no-tipping policy experiment at Joe’s Crab Shack, Ignite Restaurant Group is reportedly prepping for bankruptcy.
Bloomberg, citing sources familiar with the matter, reports that Ignite Restaurant Group could file for bankruptcy as soon as next week.
The company, which operates 112 Joe’s Crab Shacks and 25 Brick House Tavern locations, announced in a K-10 filing in April that it was pursuing strategic alternatives in an effort to improve its capital structure.
While the company said it was in discussions with lenders, it also noted that it may be required to file for protection in bankruptcy.
“It is possible that even a successful implementation of one of the strategic alternatives that we are pursuing will require us to make a filing for protection under Chapter 11 of the U.S. Bankruptcy Code,” the company said.
A spokesperson for Ignite did not respond to Bloomberg’s request for comment. Consumerist has also reached out to company. We will update this post if we hear back.
Under the policy, the company said it would implement a new set wage practice. Servers were to be paid at a rate starting at $14/hour based on their past performance. To generate the revenue needed for the new wages, the company is executing a 12% to 15% increase to the restaurant’s menu.
Six months later, the company ditched the policy and brought back its standard system.