Santa Ana Out of Planet Hollywood Orbit

Hoping to end its bankruptcy drama as a smaller but profitable company, Planet Hollywood International closed nine of its company-owned restaurants Monday, including one in Santa Ana.

“Thanks for a great 7 years,” said a sign at the restaurant across from South Coast Plaza, where Bruce Willis, Sylvester Stallone and Arnold Schwarzenegger--among the chain’s many celebrity investors--partied away one night in October 1992.

The co-founder and chief executive of the movie-themed chain, Robert Earl, said he hopes a new Orange County location will replace the “underperforming” restaurant.

The chain would like to be in Anaheim, he said, an apparent reference to Downtown Disney, the entertainment mall that Walt Disney Co. will open in 2001 next to Disneyland. Earl said no deal has been reached for an Anaheim location.

Planet Hollywood had owned 32 U.S. restaurants before the closures, which are part of a reorganization already worked out with its creditors. The chain, which announced in August that it would pare unprofitable sites, said it will make its formal Chapter 11 filing today in Bankruptcy Court in Delaware.

“One or two” more sites could be closed depending on negotiations to win more favorable terms from landlords, Earl said. He would not say if one is Beverly Hills, where the company has complained it is hampered by a city prohibition on late-night liquor sales. The company’s other California restaurants, in San Francisco and San Diego, apparently are unaffected.

Despite backing from celebrities such as Willis, Schwarzenegger and Stallone--who received stock in return for promotional work--the chain has suffered from declining year-to-year sales at many locations. Sales of Planet Hollywood T-shirts and other merchandise, which account for a quarter of revenue, also have fallen.

The Orlando, Fla.-based chain, known for the movie memorabilia hanging from the walls and ceilings, also is selling peripheral businesses such as its sports-themed All Star Cafes. And it has lined up a $30-million cash infusion from its largest shareholders, Saudi Arabian Prince Alwaleed Bin Talal and Singapore billionaire Ong Beng Seng, and a trust fund benefiting Earl’s children.

Before the cuts, Planet Hollywood owned and operated 48 restaurants around the world, with franchisees operating an additional 32. The Santa Ana restaurant was the second in the nation when it opened in 1992, after one in New York.

“It was a tremendous success for the first three years, but when they started building the ones in San Diego and Beverly Hills, it drew from ours,” said the original franchisee, Frank DiBella. “They were just too close together.”

DiBella sold the restaurant to Planet Hollywood two years ago.

Planet Hollywood went public at $18 a share in 1996 and traded as high as $28.50. Trading was suspended in August with shares at 75 cents.

Analysts say Planet Hollywood’s show-biz theme wasn’t distinctive enough to draw people back for repeat visits, given its high-priced and often uninspired food.

It is among many “eatertainment” concepts that have fallen upon hard times. While the Hard Rock Cafe has prospered, well-publicized problems have beset chains such as Minnesota-based Rainforest Cafe, New York-based Fashion Cafe and Motown Cafe, and the former Tinseltown Studios in Anaheim, a dinner theater modeled after the Academy Awards, which converted to a concert venue.

Planet Hollywood this year revised its menus and redesigned much of its merchandise. In August, however, it reported a $28.3-million second-quarter loss, up from a $1.24-million deficit a year earlier. Sales slid 27% to $76.6 million.

Besides the Santa Ana restaurant, Planet Hollywood closed operations in Chicago; Houston; Indianapolis; Miami; Phoenix; Fort Lauderdale, Fla.; Gurnee, Ill.; and Maui, Hawaii.