Moody's cuts Rare Restaurant

Moody's Investors Service said it downgraded Rare Restaurant Group LLC's corporate family rating to Caa2 from Caa1 and its senior secured notes to Caa2 (LGD3, 45%) from Caa1 (LGD3, 46%).

The outlook was revised to negative from stable.

The downgrade reflects Rare's deteriorating credit metrics stemming from accelerating, negative same store sales driven by declining customer traffic as business and consumers continue to rationalize discretionary spend, the agency said.

Ratings incorporate Rare's increasingly vulnerability revenue base, which is highly concentrated in areas that are experiencing macroeconomic softness, the agency said.

As of Sept. 24, Rare's debt-to-EBITDA ratio exceeded 8.

The company's Caa2 corporate family rating reflects the company's very modest scale, limited conceptual scope, high geographic concentration risk and weak credit metrics, the agency said.

The rating also considers the company's inability to execute its expansion strategy as initially constructed while its existing revenue base is challenged by negative macroeconomic trends, the agency said.

The rating also recognizes the company's reasonable operating margins and sizable average unit volume, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.