Eat Here Now, LLC (Babalu) Files for Chapter 11 Bankruptcy: Knoxville Restaurant to Remain Open

Babalu, 412 S. Gay Street, Knoxville, March 2016

I noticed reports about three weeks ago that Babalu in Lexington, Kentucky closed. Upon reading the article, I noted that it was the second restaurant in that development to close and, absent any other information, I assumed the development must have problems and didn’t think much more about our own restaurant on Gay Street.

Yesterday, I heard rumors of concern about the future of Babalu on Gay Street and the speculation that it would soon close. A visit to the restaurant was met with a cordial response and contact information for the marketing arm of Eat Here Now, LLC, the parent company for Babalu, but little further information about the potential story beyond the statement that the Gay Street restaurant will not close.

Babalu, 412 S. Gay Street, Knoxville, November 2015

I contacted Stacey McMinn, Marketing Director for Eat Here Now, LLC. Two stores have recently closed, one in Lexington and another in Chapel Hill. These closures followed another in Charlotte in 2018. Ms. McMinn said that plans to open another location in North Carolina have also been canceled.

According to bankruptcy documents filed on Tuesday, the rapid expansion of the chain in recent years put a strain on hiring, retention, quality control and expense. Once restaurants were closed, leases continued while revenue ceased. The increasing financial pressure led to Tuesday’s filling for Chapter 11, which allows businesses to stay open while working out their debt.

Babalu, 412 S. Gay Street, Knoxville, November 2015

Ms. McMinn says they are cash-flow positive and the company hopes to emerge from chapter 11 protection in about three months. She said the restaurants which were closed were the worst performing and that the remaining locations, including Knoxville, are doing very well. She said a team visited Knoxville on Tuesday as they have done at all the other restaurants to assure them that the remaining stores are secure. The company has stated they will continue to hire for openings and market the remaining restaurants.

Bankruptcy, by definition, means a company is currently unable to pay their debts, but Ms. McMinn made the point that employees have continued to receive pay and that is not in jeopardy. The company has also relocated managers and others from the closed restaurants. The six remaining locations are in Knoxville, Memphis (2), Atlanta, Birmingham and the original location in Jackson, Mississippi.

Comments

  1. Well, if you google Eat Here Now you can find a different version of what will happen. Pull the bankruptcy from Pacer and find how many people they owe money to.

    • There’s a lot of unsecured creditors that won’t be seeing much, so it’s not that hard to seem them emerging as a viable business or multiple viable businesses operated by one or more entities.

  2. I hope it stays open here. Very shocked, service and food is pretty outstanding as is the environment of the restaurant.

  3. My husband and I frequented this restaurant after it opened up until last year and had excellent experiences. However… We went twice this year, and both times had horrible service and food… something drastic has changed…

  4. Thanks for the info – you always do a great job of keeping up on the happenings in Knoxville and present an unbiased report on the facts. I really enjoy your blog.

  5. Lexington must have had an #unchaindowntown revolt when folks found out Babalu was indeed a chain restaurant.

  6. Wow. I would really hate to see this close. Hope they work out the issues and come out of bankruptcy.

  7. Excellent job reporting this news. Thank you for the details and full background report along with Chapter 11 document research.

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