The parent company that owns more than two dozen Dairy Queens in the region is blaming the financial effects of Hurricane Harvey and a sluggish oil market for the likely closure of many of its restaurants.
Irving-based Vasari LLC outlined its plan to close 29 stores in Texas, New Mexico and Oklahoma — including 16 in the Texas Panhandle, South Plains and Eastern New Mexico — according to documents submitted Monday and Tuesday as part of its Chapter 11 bankruptcy filing in North Texas Federal bankruptcy court.
The initial petition was filed Monday in the Fort Worth-based court.
In a statement released Tuesday, Vasari officials said that, under the Chapter 11 protection, the franchisee will restructure the company to close a significant number of underperforming restaurants by the end of the year, “resulting in a smaller but financially stronger company with approximately 45 remaining restaurants in growing markets.”
“This decision was based solely on what’s best to have a healthy company and ensure the long-term success of our core restaurants for our customers, employees and other stakeholders,” William Spae, president and CEO of Vasari, said in the statement. “Given the support we have from our primary stakeholders toward a consensual plan of reorganization, we believe this process should have minimal impact on our customers and employees at the remaining restaurants.”
The restructuring allows the company to protect approximately 700 jobs at its remaining restaurants, the statement reads.
“Employees at affected locations are being paid in full for time worked, and both human resources and area operations managers are available during crew members’ transition,” according to the statement. “In the coming years, Vasari plans to modernize and improve facilities in its remaining restaurants.”
In the bankruptcy filing, Vasari states that, because many of its restaurants are positioned in “prime oil country, it has struggled to survive the far-reaching effects of dramatic declines in oil prices.”
While waiting for oil industry-related jobs to return as oil prices begin to rebound, Vasari also faced industry pressure from competing businesses, the company wrote.
“On that front, (Vasari) continually endeavors to provide high-quality ‘treats and eats’ at very low prices while achieving a sustainable profit margin, but without a high, steady volume of customers, those margins are nil,” the document continues. “Most recently, several of (Vasari’s) stores were negatively impacted by Hurricane Harvey, resulting in physical damage, extended closures and loss of inventory.”
The document states the company closed approximately nine Dairy Queen locations prior to the petition being filed Monday and anticipates it will close approximately 20 additional Dairy Queen locations.
Most of the company’s remaining restaurants are in East Texas and along the Interstate 35 corridor, but its website lists seven in the South Plains and Panhandle, including stores in Crosbyton, Friona and Hereford.