State regulators seized four Denny's restaurants in Colorado Springs Tuesday and will take over four more southern Colorado locations Wednesday after current and former owners failed to pay nearly $191,000 in sales and payroll taxes, according to the state Department of Revenue.
An abrupt closure of the restaurants Monday night triggered Revenue Department officials to act quickly to seize the eateries, said Rodney Johnson, compliance director for the department's tax division. They changed locks and posted closure notices to guard against any removal of equipment or machinery that might need to be auctioned to satisfy back taxes, he said.
The closures left an undetermined number of Denny's employees scrambling to find jobs and wondering about paychecks. In some cases, the restaurants closed even as customers were eating, some employees said.
"Upper management went in, told them to pack their stuff and leave," said AJ, a server who declined to give his full name, about a text message from a co-worker as their Denny's closed at 1450 Harrison Road on the Springs' south side. "They had customers in the restaurant and orders that were waiting to be picked up and they said, 'Don't worry about it.'"
A state warrant shows Denny's franchisee Cooper Restauranteur and Consulting Group owes $31,141 in sales taxes from December. The money was to have been paid in January, Johnson said.
Former franchisee High Country Restaurants Holdings owes $159,817 in payroll taxes - $33,155 from 2014, $84,656 from 2015 and $42,006 from 2016, a second warrant shows.
Cooper Restauranteur bought the eight Denny's restaurants in early 2016, a Secretary of State's Office filing shows. The other Springs restaurants are at 315 W. Bijou St., 302 N. Academy Blvd. and 8125 N. Academy Blvd.
Restaurants to be seized Wednesday are at 6715 Mesa Ridge Parkway in Fountain, 100 Morning Sun Drive in Woodland Park, 3600 N. Freeway Road in Pueblo and 415 S. Lincoln St. in Burlington.
Cooper Restauranteur CEO Ebrahim Imani couldn't be reached for comment. State records list a Springs address for his business, though Imani's LinkedIn profile says it's based in Newport Beach, Calif.
High Country's Pete LaBarre of Woodland Park, the previous owner who described himself as a "Denny's junkie" in a Gazette story when he bought the restaurants in 2009, also couldn't be reached.
The owners have 10 days from the date of the seizures to pay the back taxes in full, Johnson said. If they go unpaid, the state will auction the restaurants' machinery and equipment within 60 days, he said.
Revenue officials also will thoroughly analyze the owners' taxes, which could increase or decrease the amounts owed, Johnson said.
A statement from the Denny's corporate office in South Carolina said the chain had "gone to great lengths in helping the franchisee keep these restaurants open, but unfortunately he has closed them."
"We will be evaluating potential opportunities to reopen in the market in the near future and in the meantime, welcome area residents and visitors to enjoy our diner favorites at our 15 Denver area locations. Denver area franchisees are interested in offering opportunities to impacted employees," the statement said.
Tuesday morning, several Denny's employees began showing up at the Pikes Peak Workforce Center to claim unemployment and look for work. The center posted information on its website - www.ppwfc.org - and a half-dozen Facebook job pages, as well as tweeting alerts, said spokesman Dean Miller.
The Workforce Center then contacted some of its employers, and a regional hiring manager for Waffle House responded. The center and restaurant chain held an impromptu, two-hour job fair Tuesday to fill 15 to 20 positions, Miller said.
"This is one of our specialties, to assist dislocated workers," he said.
One Denny's employee who asked to remain anonymous said he noticed a series of payroll oddities. At times, employees were paid by personal checks and didn't receive documentation of taxes being deducted. Over the past few months, the restaurant changed payroll companies several times, he said.
"It's all kind of fishy when that all started happening," the employee said.
He said he's trying to remain level-headed and get back to work, whether at Waffle House or in construction.
"Does no good to panic or anything," he said. "Lord knows that keeping a calm mind helps a lot."
AJ, who worked the graveyard shift for a little more than two months, said he was shocked when he found out his restaurant closed. He isn't sure if he'll see his last check. Wednesday would have been payday.
"The work environment was good," AJ said. "The work crews, we all got along. We supported each other."
He said about 20 people worked at his Denny's.
"We were hoping corporate would kick in and either take over or help in some way," AJ said. "I think we're still waiting or hoping for that."
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