Ignite Restaurant Group Inc., the operator of the Joes Crab Shack and Brick House Tavern & Tap chains, has filed for bankruptcy with an eye toward a possible sale to an affiliate of Kelly Investment Group.

Ignite has seen sales decline as the U.S. dining sector faces drops in customer traffic. The company listed estimated total debts as of April 30 of $197.3 million in Chapter 11 papers filed Tuesday in Houston federal court. Assets totaled $153.4 million.

Ignite announced in April that Robert S. Merritt had resigned as chief executive officer and left the board. Jonathan Tibus, a managing director at turnaround firm Alvarez & Marsal, was chosen to replace him.

The debtors have continued to experience declining financial performance and declines in comparable restaurant sales and income from operations at Joes and Brick House, Tibus said in a court filing. The debtors have closed underperforming restaurants and implemented cost reduction measures to help mitigate the effect of these declines and improve their financial position and liquidity.

Ignite began looking around for a buyer last year, but as its condition deteriorated, viable offers dried up. In June, Ignite lined up Kelly affiliate KRG Acquisitions Co. as a stalking horse to open bidding in a court-supervised auction. KRGs offer consists of $50 million and assumption of liabilities.

Ignite says all Joes Crab Shack and Brick House Tavern restaurants will remain open as it goes through the bankruptcy and sales process. In an FAQ, the company says that it will continue to accept gift cards, coupons and other promotions in accordance with its policies.

Joes Crab Shack made headlines last year when the company backed away from its no-tipping policy that began in November 2015., according to Consumerist, a consumer website that is a not-for-profit subsidiary of Consumer Reports.

Under the policy, the company said it would implement a new set wage practice. Servers were to be paid at a rate starting at $14/hour based on their past performance, Consumerist reported. To generate the revenue needed for the new wages, the company executed a 12 percent to 15 percent increase to the restaurants menu.

Six months later, the company ditched the policy and brought back its standard system.

The broader U.S. restaurant industry is suffering headwinds on multiple fronts. Eateries are relying more heavily on discounts and specials to attract diners, crimping profit margins. And a historic bout of food deflation has turned grocery stores into a bigger bargain. Thats made consumers more likely to eat meals at home.

Chain restaurants also are losing market share to mom-and-pop places a shift for the industry. Sales for independent restaurants are expected to grow about 5 percent through 2020, while chains will climb just 3 percent, according to Pentallect Inc., a research firm in Chicago.

Ignite operates 112 Joes including one in Jacksonville Beach and 25 Brick House restaurants only ones in Florida are in Orlando and Tampa in 32 states, plus three franchises in the United Arab Emirates, according to court papers. It employs 8,400 people, including 5,500 part-time workers. The first Joes opened in Houston in 1991.

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Owner of Joe's Crab Shack files for bankruptcy | Jacksonville News ... - Florida Times-Union