It is impossible to forecast what will happen in the restaurant business. Despite the fact that some chains are having trouble keeping up with their rivals, others are still grappling with the impact of the epidemic. For a number of people, the accumulation of financial troubles over the course of many years has become so severe that they have no other option except to file for bankruptcy.
A single Popeyes franchisee filed for bankruptcy under Chapter 11 at the beginning of the year, which was then followed by a number of other franchises applying for the same kind of financial protection. With the exception of one of the most well reported bankruptcies, which was filed by the national seafood business Red Lobster, they were mostly comprised of smaller franchises such as Sticky’s Finger Joint, which is located in New York.
As a result of these recent filings, a number of restaurant chains have been forced to reduce the number of locations in their portfolio in order to simplify their operations. Continue reading to learn about all of the successful restaurant franchises that filed for bankruptcy protection in the year 2024.
10. TGI Fridays
Several weeks after it was initially reported that TGI Fridays was making preparations for a possible bankruptcy, the casual dining company made the announcement on November 2 that it had filed for Chapter 11 bankruptcy protection. Only the 39 TGI Fridays locations that are owned by the firm are impacted by the bankruptcy.
These locations have been provided with funds to continue providing service to customers while the Chapter 11 process is ongoing. Moreover, franchised TGI Fridays locations will continue to operate as usual. The filing for bankruptcy was the culmination of a challenging time for the business, which had been struggling for years with both continued sales growth and closures. As a result of the company’s failure to provide documentation to bondholders in a timely manner, the majority of the company’s assets were recently taken away from it.
Soon after that, the TGI Fridays operator Hostmore, which is located in the United Kingdom, abandoned its aspirations to acquire the brand, shut down 35 locations, and filed for the equivalent of bankruptcy in the United Kingdom. It has been said that TGI Fridays aims to use the bankruptcy process in order to reorganize its financial situation and “explore strategic alternatives in order ensure the long-term viability of the brand.”
9. Oath Pizza
In October, the fast-casual pizza business Oath Pizza made the formal decision to file for bankruptcy under Chapter 7, which is a process that involves the disposal of the remaining assets of the firm. According to Restaurant Business Magazine, the filing comes one year after Oath Pizza unexpectedly closed all of its corporate-owned outlets.
This decision was made in response to financial difficulties as well as a significant legal dispute between investors in the firm and an executive who was seeking to acquire the chain. (Earlier this year, that case was resolved at a settlement).
8. BurgerFi
BurgerFi International, Inc., the parent organization of BurgerFi and Anthony’s Coal Fired Pizza & Wings, made the announcement on September 11 that it has filed for bankruptcy under Chapter 11 in order to “preserve the value of its brands for stakeholders.” After experiencing persistent financial problems, the firm disclosed in a filing with the United States Securities and Exchange Commission (SEC) that it may seek protection under the bankruptcy laws.
The revelation comes less than one month after the company made the announcement. BurgerFi has estimated that it has assets worth between $50 million and $100 million and liabilities of between $100 million and $500 million, as stated in the bankruptcy petition. “BurgerFi and Anthony’s The fuel Fired Pizza & Wings are dynamic and beloved brands, and in the face of a drastic decline in after the pandemic consumer spending amid sustained inflation and increasing food and labor costs, we need to stabilize the company in a structured process,” Jeremy Rosenthal, chief restructuring officer of BurgerFi International, Inc., said in a press release. “We need to stabilize the business in a structured process.”
7. Roti
On August 23, the fast-casual Mediterranean company Roti made the formal announcement that it has filed for bankruptcy under Chapter 11 after seeing a reduction in system sales and a number of mass closures in the previous year. According to the corporation, the decision was made due to a number of different financial concerns, including increased expenses, the inconsistent performance of its restaurants, and challenging market circumstances.
Roti has said that it would use the process of filing for bankruptcy in order to restructure its financial situation and look for new investors or a buyer. The company intends to go on with business as usual at its remaining 19 stores, which are dispersed among the cities of Chicago, Minneapolis, and Washington, District of Columbia. “Bankruptcy is a procedure that is meant to give businesses like ours with the tools necessary to continue operating, to maintain employment for our amazing team members, and to investigate potential future opportunities for Roti.
According to a statement released by CEO Justin Seamonds, “We anticipate that our devoted and flavor-seeking customers will continue to take pleasure in our establishment even as we take this essential next step in our journey.”
6. World of Beer
During its heyday ten years ago, World of Beer Bar & Kitchen was one of the casual dining chains that had the most rapid expansion in the United States. However, since then, the business has seen a decline in popularity. The business has reportedly filed for bankruptcy under Chapter 11 in August, as a result of the increasing amount of debt it is carrying, as reported by Restaurant Business.
As of present, it has 33 restaurants, the most of which are situated in the southeast region. Over the course of the last year, it has closed 14 of its locations. While the craft beer industry was experiencing a boom in the early 2010s, the business flourished and expanded. However, according to the corporation (and as learned from the court filings), its franchisees did not always possess the industry experience that was necessary for success. Furthermore, the idea collapsed as a result of mismanaged ownership and a variety of litigation that cost the company millions of dollars.
After then, the pandemic struck, which made the journey much more difficult. The company’s goal is to reorganize and concentrate on the places that are most lucrative for it.
5. Buca di Beppo
Following the closure of thirteen outlets, Buca di Beppo made news at the end of the month of July. The business is now attempting to position itself for success by declaring for bankruptcy under Chapter 11 of the United States Code. According to Nation’s Restaurant News, the firm has said that some of its problems include declining revenues, rising prices, continuous difficulties with personnel, and shifting tastes among customers.
The petition for bankruptcy is being done with the intention of improving the eating experience for consumers and optimizing business operations. From this point forward, Buca di Beppo will continue to run its 44 core locations, which the firm is now “restructuring.” Additionally, the chain will be launching one more store.
4. Gotham Restaurant
Gotham Restaurant, a well-known fine dining establishment in New York City, is now facing the possibility of bankruptcy and has temporarily closed its doors to diners. The restaurant has been in operation for forty years. The restaurant’s parent business, Gotham Restaurants LLC, filed a petition for protection under Chapter 11 of the United States Bankruptcy Code on July 24.
According to Nation’s Restaurant News, the bankruptcy petition highlighted debts totaling hundreds of thousands of dollars, including roughly $484,000 that was owing alone to the Finance Bankruptcy/Special Procedures Section of the New York State Department of Taxation. In the meanwhile, Gotham recently suffered a loss of $45,000 due to an alleged cyberscam, which caused the restaurant to briefly suspend its lunch and supper services.
According to Eater New York, co-owner Cassandra Csencsitz said that the company had previously been working “close to the bone,” and as a result, the loss of such a significant amount of money caused them to temporarily cease operations. Although the restaurant has not yet resumed its lunch and dinner service, Gotham has reopened its bar and is now serving drinks and snacks from Tuesday through Friday from five o’clock in the evening till the restaurant closes for the night. On the website of the restaurant, it is stated that they are “working to reopen this September.”
3. Tender Greens & Tocaya
On July 17, One Table Restaurant Brands, the parent company of the salad chain Tender Greens and the Mexican brand Tocaya, formally began the process of filing for bankruptcy under Chapter 11 of the United States Code. According to Restaurant Business Magazine, the firm blamed its financial difficulties on a number of factors, including the COVID-19 epidemic, increasing interest rates, and increased prices.
These factors were included in court records. The investment firm Breakwater Management LP is presently being approached by One Table with a request for three million dollars so that the business may continue to function normally while it searches for a buyer. The firm has said that it does not intend to shut any of its sites at this time, which is excellent news for fans. As of right now, Tender Greens’ runs 24 restaurants in the state of California, whilst Tocaya operates 15 locations in the states of California and Arizona.
2. Melt Bar & Grilled
Melt Bar & Grilled, a restaurant business established in Cleveland, Ohio, which is well-known for its gourmet grilled cheese sandwiches, filed a petition for bankruptcy under Chapter 11 on June 14. The statement indicates that the firm has been having difficulty making payments to its landlords, suppliers, and service providers.
Several factors, including “major shifts and changes in the service industry” and the growing cost of commodities and labor, have been cited in court records as having a detrimental impact on the chain’s operations. Not only that, but according to WKYC, Melt will be closing its outlets in Akron and Mentor, Ohio, this month. Following the closure of these establishments, the business will maintain just its restaurant in Lakewood, Ohio, in addition to its outlets at Progressive Field in Cleveland and Case Western Reserve University both in Ohio.
Beginning on September 2, Melt will temporarily shut its Lakewood location for a period of one week in order to undergo renovations, as well as other modifications to its menu and branding. Additionally, Melt terminated its operations in the year 2024 in the cities of Cedar Point, Independence, and Avon, Ohio.
1. Rubio’s Coastal Grill
Rubio’s made the formal announcement of its second Chapter 11 bankruptcy filing on June 5, only a few years after the company filed for bankruptcy during the COVID-19 outbreak. This decision was made by the business because to increased expenses, a decrease in customer visits, and the new minimum wage of $20 per hour for workers in the fast-food industry in the state of California.
Despite the fact that Rubio’s shuttered 48 underperforming locations in California in May in an effort to enhance the overall health of the company, the closures did not resolve the company’s financial problems. “Despite the Company’s attempts to right-size the company, the continued challenging economic conditions have harmed its ability to meet the requirements associated with its debt burden,” Nicholas Rubin, Rubio’s chief reorganization officer, said in a statement.
“The company has been unable to meet the demands of its debt burden.” The new owner of Rubio’s took over the business two months after the company filed for bankruptcy. For a total of forty million dollars, the business was sold to its lender, The Original Fish Taco LLC, which is a restaurant establishment that is affiliated with TREW Capital Management.