#RestaurantCrisis #Chapter11 #2024Bankruptcies
Restaurant Bankruptcies Surge in 2024: A Crisis in the Industry
This year has witnessed a significant increase in Chapter 11 bankruptcy filings, with the restaurant sector experiencing its share of this phenomenon. At least ten prominent restaurant chains, excluding franchise operations, have sought bankruptcy protection in 2024. The rise in restaurant bankruptcies mirrors a broader escalation in corporate bankruptcies across various industries.
The most notable names to file for bankruptcy include Red Lobster, Buca di Beppo, and Roti. These filings are attributed to a decline in consumer spending, escalating labor expenses, and the cessation of government support that was extended during the COVID-19 pandemic. BurgerFi, which owns Anthony's Coal Fired Pizza & Wings, expressed substantial doubt regarding its operational viability. Other companies, such as Mod Pizza, have narrowly escaped bankruptcy through last-minute acquisitions.
The trend of seeking bankruptcy protection is not limited to restaurants, as numerous businesses are grappling with elevated interest rates. According to BankruptcyWatch, Chapter 11 filings have risen by 49% as of August 20. Other notable companies that have declared bankruptcy this year include mall retailer Express, the nursing home chain LaVie Care Centers, and Joann Fabrics and Crafts.
Key Restaurant Chains Filing for Bankruptcy in 2024
-
Roti – The Mediterranean-cas chain Rot filed for Chapter 11 protection on August 23. The company is collaborating with its landlords and suppliers to maintain its 22 locations while seeking new investors or buyers.
-
Melt Bar & Grilled – The Cleveland-based chain Melt Bar & Grilled sought Chapter 11 protection in June due to difficulties in meeting obligations to vendors and landlords. Known for its grilled cheese sandwiches and craft beer selections, the company was established in 2006. At its peak, it had 14 locations, but this number had dwindled to four by the time of its bankruptcy filing.
-
Kuma's Corner – Kuma Holdings, the parent entity of Kuma's Corner, filed for bankruptcy in June. This midwestern burger chain, which opened its first restaurant in 2005, distinguished itself with a menu inspired by metal and punk music.
-
Red Lobster – The seafood chain Red Lobster filed for protection, citing a "challenging macroeconomic landscape, an oversized and underperforming restaurant presence, unsuccessful strategic initiatives, and heightened competition." Among its challenges was a problematic "endless shrimp" promotion in 2023, in addition to costly lease agreements established under previous ownership. Recently, the investment group acquiring Red Lobster appointed P.F Chang's Damolaolekun as the prospective leader, contingent on a successful exit from Chapter 11.
-
Tijuana Flats – Tijuana Flats announced ownership changes, Chapter 11 filing, and the closure of 11 restaurants in April. A private equity firm sold the chain to Flat LLC as part of its restructuring efforts. The chain was founded in 1995.
-
Sticky's Finger Joint – The chicken tender chain Sticky's Finger Joint also filed for bankruptcy in April. Factors such as rising commodity prices, the aftermath of the pandemic, and legal costs from a trademark dispute with rival Sticky Fingers prompted the company to restructure. Founded in 2012, Sticky's reported annual sales of $22 million in 2023, as indicated in a court filing.
- Boxer Ramen – The Portland-based ramen chain Boxer Ramen filed for Chapter 11 in February. In late 2023, it closed all four of its locations, marking the end of over a decade of operations.
As the landscape of the restaurant industry continues to evolve, these filings highlight the financial challenges many establishments face in the current economic climate.
Original Article: https://www.cnbc.com/2024/09/01/restaurant-chains-that-filed-for-bankruptcy-this-year.html
Leave a Reply