The family dining concept Shari’s Restaurants appears to be in serious financial trouble.
Multiple news reports indicate the Beaverton, Oregon-based chain that operates as Shari’s Café & Pies is facing allegations of unpaid rent and taxes, as well as eviction notices. At least seven restaurants have closed over the past few months and the company faces numerous lawsuits, mostly in various state courts.
Operated by Shari’s Management Corp., the chain appears to be owned by Gather Holdings LLC, led by industry veteran Sam Borgese, who was named CEO of Shari’s in 2017.
Borgese’s LinkedIn profile indicates that he ended his role as CEO in April 2023, as does his profile as a member of El Pollo Loco’s board of directors. But the Oregon Secretary of State’s office listed him as Shari’s president as recently as January this year.
Borgese did not immediately respond to press requests, and multiple attempts to reach Shari’s went unanswered.
Founded in 1978, Shari’s has a long history in the Pacific Northwest and is known for its pies and comfort-food menu, along with hexagon-shaped restaurants. At one point, it was a 95-unit chain, but now appears to have about 60 locations.
First reported by KGW8 in Oregon, the news of Shari’s financial woes follows an announcement last year that affiliates of MGG Investment Group LP made an investment in Shari’s.
Terms were not disclosed, but Borgese said at the time that the investment brought needed capital to continue the chain’s recovery after the pandemic.
“MGG has deep knowledge of video lottery gaming operations, which are present in our 42 Oregon restaurants, and we look forward to leveraging their expertise as we continue to provide the delicious meals and entertainment our loyal customers expect,” he said in a statement.
Shari’s customers in 2023 collectively spent $34.7 million playing video lottery games at the restaurants in Oregon, which generated about $7.5 million in lottery commission, according to data posted on the Oregon Lottery website. It’s not clear, however, whether the video lottery sales generated revenue for the restaurant chain.
MGG also did not respond to requests for information.
Despite that apparent influx of cash, however, Shari’s problems appear to be growing.
In Washington state, at least two landlords have sued Shari’s this year for unpaid rent and are seeking eviction.
Jasonn Properties LLC in Washington state said in a lawsuit that a Shari’s unit in Silverdale, Washington, had not paid rent since last December, according to the Kitsap Sun. In the filing, attorneys for the landlord argued that the Shari’s unit had racked up more than $153,000 in unpaid rent, and that the company had also not paid property taxes for half of 2023 or the first half of this year.
At the end of July, Shari’s was served with an eviction notice, according to the report, but the Silverdale location was open as of Thursday.
A Shari’s in Bremerton, Washington, however, appears to have closed. It was the subject of a similar lawsuit filed in 2022 including charges of missed rent and other fees, according to the report.
Several lawsuits were filed in state courts in Washington State against Shari's Management, according to a search of court records.
Another report cited more than 10 debt collection and/or unlawful detainers tied to eviction had been filed against Shari’s across the state, and tax warrants in late 2023 indicated Shari’s owed more than $708,000 in October, $300,000 in November, and $28,000 in December, though the filings do not indicate whether those taxes were later paid.
In Idaho, the state Tax Commission has filed six liens on Shari’s Management Corp. of Beaverton, which operates the restaurants there, though three units have closed in recent months, according to Boisedev.com.
The report said that active liens totaled more than $223,000, though the amounts may have decreased since they were filed.
Shari’s was founded in 1978 by Ron and Sharon Bergquist and by 1999, the company claimed to be the largest family restaurant chain in the country in total sales. In 2005, it was acquired by Circle Peak Capital, and at one point grew to around 100 units, including some in Colorado, Utah, Arizona and Texas, but those later closed.
In 2016 it was acquired by CapitalSpring. The investment firm exited a couple of years ago. Ownership has since shifted to Gather Holdings, led by Borgese, an industry veteran of Logan’s Roadhouse and Charlie Brown who had previously run the Coco’s and (now defunct) Carrows chains.
After Borgese took the helm of Shari’s in 2017, the company acquired both Coco’s and Carrows, which were once part of the struggling Catalina Restaurant Group that Borgese had led previously.
Currently, seven Coco’s Bakeries are listed on its website, all in California. The Carrows brand in 2023 announced it was “retiring,” and no locations remain.
Meanwhile, the Shari’s units that have closed in Washington state in recent months include Walla Walla, Bremerton, Kennewick, Yakima and Tacoma. In Idaho, units have shuttered in Moscow, Lewiston, and Idaho Falls.
In 2023, Shari’s had $121.4 million in sales, which were down 7.5% over the prior year, according to Restaurant Business sister company Technomic. The chain ended the year with 78 units, which was a 7.1% decline.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.