Boston Chicken Inc., once a Wall Street favorite, filed for bankruptcy protection Monday and closed 178 restaurants around the country.
J. Michael Jenkins, Boston Chicken chairman, president and chief executive officer, said the company filed for Chapter 11 protection because it would not have been able to complete its restructuring plan by Oct. 17, when about $283 million in debt comes due.
"We had hoped to restructure out-of-court and gave it our best effort," Jenkins said.
Chapter 11 allows a company to postpone payment of its debts while it reorganizes its finances. Boston Chicken, whose stock has plunged to less than $1 per share, said the bankruptcy filing and restructuring should eliminate about two-thirds of the company's total debt.
The company said all but 500 of the 18,500 employees at the stores being closed would be relocated to nearby stores. It said it closed 178 of 1,143 restaurants, which carry the name Boston Market.
Founded in Newtonville, Mass., in 1985, Boston Chicken built a nationwide business on homestyle food: mashed potatoes, gravy and rotisserie chicken.
The company's initial public offering was priced at $20 per share in November 1993, quickly shot to nearly $50, and split two-for-one in 1994.
"In all my years in the business, I've never seen any IPO that came close to the frenzy created by this one," Merrill Lynch & Co. investment banker Charles Lewis, who set up the stock offering, said at the time.
He said the company had "a very strong concept that was easy to understand ... and the unbelievably strong pedigree of the management."
But after five years of steady growth, Boston Chicken posted its first mixed sales in 1997. Analysts said the company was expanding too aggressively and lost its focus. This spring, the company's co-chairmen, Saad Nadhir and former chief executive Scott Beck stepped down from running the company.
Boston Chicken's shares fell 28 1/4 cents to 46 3/4 cents in midday trading Monday on the Nasdaq Stock Market. Onltwo years ago, the company's shares were approaching $40.