After years of financial struggles, Shells Seafood Restaurants today declared Chapter 11 bankruptcy in a regulatory filing. The restaurant will continue to manage and operate as a "debtor-in-possession" under the jurisdiction of U.S. Bankruptcy Court.
Also, Warren Nelson, president and CFO, resigned his position last week. He had been president since February.
Shells has struggled financially over the past nine years, posting an annual profit only once, earning $677,000 on $47.2 million in revenue in 2002. Shells, which debuted in Tampa in 1985, peaked at 50 restaurants - 32 in Florida and 18 in the Midwest - in 1999. Now there are only 23 locations in the Sunshine State.
Like many casual chains, Shells has been hit hard by the economic slump, as Americans dine out less frequently. The Tampa, Fla., company reported revenue of $19.6 million in the first half of 2008, down 21 percent from the same period last year.
The news came shortly after the company announced it is testing a new seafood concept in South Florida in an effort to rejuvenate the ailing chain.
Dubbed Rock Beach Grill, the concept is more upscale than Shells, featuring a more modern décor and a menu that boasts variety. The Pembroke Pines, Fla., restaurant - a converted Shells - reopened Aug. 1.
"This gives us options to change over more stores or open up new ones under the concept," Nelson told the Tampa Bay Business Journal earlier this week.
According to the weekly newspaper, Philip Chapman, Shells' chairman and largest stockholder with 19.49 percent, and Barry Bernstein, father of Shells' CEO Marc Bernstein, each put up $87,500 for a 15 percent ownership of the concept. The company retains 70 percent ownership and contributed the physical assets, such as the building and equipment.
In July, Shells rolled out a new menu featuring more than 20 new items and reduced prices - its largest menu overhaul ever. The chain is trying to revamp its image by emphasizing variety and value during an economic downturn.
Company executives are pleased with the overhaul so far, but it's too soon to see the results on the balance sheet, Nelson said.
