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Same Funny Name, New Owners

AUSTIN, TX-With the approval of the bankruptcy court, the sale of Schlotzsky's sandwich chain is in the works, CEO says.

By Dees Stribling | Updated on November 29, 2004

AUSTIN, TX-New ownership for locally based sandwich purveyor Schlotzsky’s is on the horizon after a bankruptcy judge in Texas approved a plan to sell the assets of the company by auction early in December. The sale would the latest event in a stormy period for the company, which uses the slogan “Funny Name. Serious Sandwich,” precipitated by large losses in 2003 and earlier this year.

The sale of Schlotzsky’s assets, approved the day before Thanksgiving by Judge Leif M. Clark with the United States Bankruptcy Court for the Western District of Texas, San Antonio Division, will be held on Dec. 7 at the Dallas offices of the company’s law firm, Haynes and Boone, with bids accepted the day before. “There are a number of leading contenders to buy the company, both strategic and financial,” Sam Coats, interim president and CEO of the sandwich maker, tells GSR. “People with financial wherewithal have partnered with restaurant operating backgrounds. This is very encouraging.

“At one time, this company had a market cap of more than $170 million, but when I started on June 17, market cap had dwindled to less than $11 million,” he continues. “We had too many stores that were negative cash-flowing, typically stores that corporate had taken back, which were then closed. Technically, the company was insolvent when I walked in the door,” says Coats, a former airline executive who was involved in the restructuring of Continental.

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