Eegee's, Tucson's iconic sandwich chain known for its namesake frozen fruit drink, filed Chapter 11 bankruptcy on Friday.
The filing in U.S. Bankruptcy Court in Phoenix came a day after Eegee's LLC, owned by 39 North Capital, closed four locations in Tucson and one in Phoenix, bringing the total number of restaurants in Arizona to 25 — 21 in Tucson and four in the Phoenix area.
The Chapter 11 filing will give the company breathing room to reorganize and stabilize, said Chris Westcott, Eegee's interim CEO.
"We didn’t come to this decision lightly, but we thought it was in the best interest to file Chapter 11," said Westcott, who joined the company two weeks ago. "The brand has been struggling since the pandemic ... and we just haven't bounced back to pre-pandemic levels.”
Eegee's listed roughly $2.8 million in outstanding debt owed to its 20 largest creditors including Sysco Food Services of Arizona (just over $1 million), Merit Foods of Tucson ($725,972) and Ramp Flex ($410,618), according to the bankruptcy documents.
The bankruptcy could take three to six months to resolve before the company will evaluate next steps, Westcott said.
"We are very bullish on the brand," said Westcott, whose decades-long restaurant career has included fine-dining operations in Pennsylvania and Oregon. "We believe this will be a step towards stabilizing the brand and getting back into a growth mode.”
A note posted in the drive-thru display Friday of the Eegee’s location on West Grant Road thanks customers for their support and directs them to other restaurants in the area.
Eegee's, which started in Tucson as a frozen lemonade truck in 1971, had 24 locations when 39 North Capital bought the company in 2018. Months later, the company announced plans to expand into the Phoenix area.
In a year's span between 2021 and 2022, Eegee's opened five Phoenix locations, bringing the company's total to 35.
But the expansion came with some retraction in summer 2023. Eegee's closed three Tucson stores in a four- to five-week span as part of a strategic plan aimed at capitalizing on the city's changing demographics, officials said at the time.
On Thursday, the company closed restaurants at 1530 W. Grant Road; 502 W. Ajo Way; 6810 E. Tanque Verde Road; and 7760 E. Speedway. Officials said there were no more planned closures.
"Our goal (is) to ... find out what is working and what we have to work on ... to move in a positive direction," Westcott said.
Some longtime Eegee's customers might see the company's recent announcement to switch bread vendors as a starting point.
Eegee's in October 2022 switched bread vendors for the first time in years, leading to swift customer blowback. Last May, the company announced on Facebook that it was testing new bread from longtime Arizona baker Capistrano's.
In August, it made the switch after road-testing the bread at several locations where customers "ordered (it) thousands of times."
Westcott said the remaining restaurants will operate "business as usual," with no planned menu changes or changes in the company's customer loyalty and gift card programs.
