Reorganization means a smaller company, but one that is poised
to grow, CEO says
Morgan Hill – Local restaurant chain Fresh Choice has emerged from bankruptcy a smaller company but one poised to grow into profitability, CEO Tim O’Shea said Friday.
“Now we’re working on how we can grow this company,” O’Shea said. “There are no specific plans yet, but now we have capital so we can look at trying to grow the business again. We’re very pleased we’re at this point. We have a future.”
Morgan Hill-based Fresh Choice filed for bankruptcy in July 2004 after closing nearly two dozen failing stores. One store, at the Valley Fair Mall in San Jose, was open for just four months.
The Chapter 11 reorganization allowed the company to shed its commitments on a series of long-term leases. Fresh Choice closed stores in Texas, Washington and southern California. It currently has 28 locations in northern California, including Gilroy and the Almaden area of San Jose., down from 46 before the reorganizations. The debt was an estimated $8.5 million.
“The strategy we employed was to pare the company back to our core market,” CFO Dave Pertl said. “Valley Fair is an excellent mall, and we considered it a core market, but it was just way too expensive of a deal.”
The privately held company has two new investors, the organic food commissary Cedar Lane, and Crescent Real Estate Group of Texas.
O’Shea said the chain fell victim to a series of unfortunate events in 2000 and 2001, just as it was aggressively expanding into other markets. The company’s South Bay restaurants suffered during the hi-tech downturn and the entire chain was hurt by the terrorist attacks of 9/11. The brand never caught on in the Los Angeles area, and a popular diet fad damaged the appeal of the chain’s soups, pasta and bakery items.
“It was a culmination of several things,” O’Shea said. “There was the low-carb event. We suffered a decline in sales. It was a pretty significant hit.”
In addition to closing stores, Fresh Choice has begun remodeling its existing restaurants and tinkering with the menu, bringing back old favorites like meatballs in the bolognese sauce, and experimenting with limited-time gourmet options to keep the menu fresh.
“We’re willing to try anything to see what kind of reaction we get from guests,” O’Shea said, promising promotions based on Italian cuisine, a “Latin Lovers” theme and a summer full of exotic salads.
“We have blow-out, no holds barred recipes for the summer,” he said. “Some incredible ideas and concept salads that I think will really excite our guests.”
