Ruth’s Chris Steak House, in business 22 years, closes doors

With his legal defenses and funds largely exhausted, Marcel Taylor had no choice but to end his 22-year run as the owner of Ruth's Chris Steak House just east of the Strip.

Taylor had fallen behind on his royalty payments to Ruth's Chris Steak House Franchise Inc. in 2009, as recession and President Barack Obama's admonitions against going to Las Vegas put a big dent in the critical meeting and convention trade. Even though the numbers have moved up in the past year, it proved to be too little, too late to save the restaurant, a pioneer among those that congregate at or near the intersection of Flamingo and Paradise roads.

On Oct. 5, a federal judge in Orlando, Fla., ruled against Taylor and his company, T-Fab Inc., on a procedural issue in a lawsuit brought by the franchise company. This opened the way for Ruth's Chris to order the restaurant closed after having severed the franchise agreement in early 2010.

By Monday afternoon, the doors were locked and the outside signs covered after Ruth's Chris told Taylor and his son, Anthony, that it wanted operations halted quickly.

On Saturday, Marcel Taylor told the approximately 60 employees that they no longer had jobs.

"I really didn't have time to do anything to end this the right way," said Taylor, 72. "I just ran out of money for lawyers and I'm tired of fighting this."

Despite T-Fab's financial struggles, which included about $1 million in back taxes and rent, according to documents in the company's Chapter 11 bankruptcy case, Taylor contended that territorial factors also loomed large.

"It all comes down to (Ruth's Chris) wanting Las Vegas for a corporate location," he said.

He said the national chain plans a restaurant at Tivoli Village in Summerlin, though a spokesman for the development said there "was nothing to announce at this time."

Ironically, the restaurant's results had started to improve. It served 60,500 entrees last year, according to Taylor's numbers, up 20 percent from a difficult 2009, while revenues rose 21 percent, to $4.9 million.

This year, the number of entrees grew by 7.5 percent and revenues by 2.5 percent compared with last year.

This was still well short of the $5.5 million in 2008 sales.

While the restaurant's denouement came suddenly, it was several years in the making. In 2006, Taylor won a court fight in Louisiana with other T-Fab shareholders to remain the officially designated franchisee, but legal expenses drained his approximately $500,000 reserve.

Taylor said that when the economy sank and Obama spooked corporate traffic with his remarks, he had little cushion to rely on. He closed T-Fab's other locations, on West Flamingo Road and in Denver, two years ago as losses mounted.

Filing Chapter 11 in July 2010 halted the lawsuit in Florida because bankruptcy stops outside proceedings while a company's financial affairs are sorted out. However, Ruth's Chris obtained bankruptcy court approval to move ahead with its case.

Ruth's Chris contended that the franchise was severed when Taylor did not perform on a deal to catch up on the overdue royalties that had gone past $100,000 in 2009.

The company also contended that Taylor continued using the name improperly, though he countered that he was still treated as a franchise in every other way, such as receiving regular written reports and health inspections from the head office.

At this point, Taylor talks about starting another restaurant, although the T-Fab bankruptcy is still unresolved.

"I was in the Marine Corps," he said. "I'm hard-headed."

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.