The restaurant industry remains as unpredictable as ever. Although some chains are experiencing difficulty in maintaining a competitive edge, others are still grappling with the repercussions of the pandemic. For many, the accumulation of financial challenges has persisted for years, necessitating the filing of bankruptcy.
The year commenced with a single Popeyes franchisee declaring Chapter 11 bankruptcy, which was subsequently followed by a series of chains filing for the same financial protection. The majority of these were lesser franchises, such as Sticky’s Finger Joint, which is based in New York. However, Red Lobster, a national seafood giant, filed one of the most highly publicized bankruptcies.
Numerous restaurant chains have been compelled to rationalize their restaurant portfolios by closing locations in response to these recent filings. Continue reading to identify all the restaurant chains that have applied for bankruptcy protection in 2024.
1. Roti
Roti, a fast-casual Mediterranean chain, filed for Chapter 11 bankruptcy on August 23, following a decline in system sales and mass closures last year.
The company attributed the decision to a variety of financial factors, including the varied performance of its restaurants, increased costs, and challenging market conditions.
Roti stated that it will utilize the bankruptcy procedure to reorganize its finances and seek new investors or a buyer. All 19 of its remaining locations, which are dispersed throughout Chicago, Minneapolis, and Washington, D.C., will continue to operate as usual.
“Bankruptcy is a process that is intended to grant companies such as Roti the resources necessary to maintain their operations, retain their exceptional employees, and investigate potential future opportunities.”
In a statement, CEO Justin Seamonds stated, “We anticipate that our loyal, flavor-seeking guests will continue to appreciate our establishment as we address this essential next phase of our journey.”
2. World of Beer
World of Beer Bar & Kitchen was once one of the fastest-growing casual-dining brands in the country; however, the chain has experienced financial difficulties since its peak a decade ago.
The chain filed for Chapter 11 bankruptcy in August, as reported by Restaurant Business, as a result of its increasing debt. Over the past year, it has closed 14 locations, resulting in a total of 33 restaurants, the majority of which are situated in the southeast.
During the early 2010s, the chain experienced significant growth and expansion as a result of the craft beer explosion. Nevertheless, the company (and the court documents) assert that its franchisees lacked the industry expertise necessary for success, and the concept was ultimately undermined by mismanaged ownership and numerous lawsuits that resulted in millions of dollars in losses.
Subsequently, the pandemic occurred, which further complicated the situation. The organization intends to streamline its operations and concentrate on its most profitable regions.
3. Buca di Beppo
Buca di Beppo made headlines at the conclusion of July when it announced the closure of 13 locations. The chain is currently seeking to establish a foundation for success by declaring Chapter 11 bankruptcy.
Nation’s Restaurant News reported that the organization was confronted with a variety of challenges, including declining sales, rising costs, ongoing personnel challenges, and shifts in consumer preferences.
The bankruptcy filing is designed to improve the dining experience for consumers and optimize operations. In the future, Buca di Beppo will maintain its 44 primary locations, which it is “restructuring.” Additionally, an additional location is being established by the chain.
4. Gotham Restaurant
Gotham Restaurant, the renowned fine dining establishment in New York City, has temporarily shuttered its doors to clients due to bankruptcy, following 40 years of operation. The primary corporation of the restaurant, Gotham Restaurants LLC, filed for Chapter 11 bankruptcy protection on July 24.
According to Nation’s Restaurant News, the bankruptcy filing disclosed debts totaling hundreds of thousands of dollars, with nearly $484,000 of that amount due to the New York State Department of Taxation Finance Bankruptcy/Special Procedures Section.
In the interim, Gotham temporarily suspended its lunch and dinner services following a recent loss of $45,000 in an alleged cyberscam.
According to Eater New York, co-owner Cassandra Csencsitz stated that they had been operating at a “bare minimum” for some time, and the substantial financial loss necessitated a temporary cessation of operations.
Gotham has reopened its bar and is presently serving cocktails and nibbles from 5 p.m. until closing time on Tuesdays through Fridays, despite the fact that lunch and dinner services have not yet resumed. According to the restaurant’s website, it is “in the process of reopening in September.”
5. Tocaya and Tender Greens
On July 17, One Table Restaurant Brands, the parent company of the Mexican chain Tocaya and the salad chain Tender Greens, formally filed for Chapter 11 bankruptcy.
Restaurant Business Magazine reported that the company attributed its financial difficulties to the COVID-19 pandemic, rising interest rates, and elevated costs in court documents.
One Table is currently in the process of securing $3 million from the investment company Breakwater Management LP in order to maintain its current operations while it searches for a successor.
The company has no intention of closing any of its locations at this time, which is a positive development for its customers. At present, Tender Greens’ operates 24 restaurants in California, while Tocaya operates 15 restaurants in Arizona and California.
Harald Herrmann, CEO of One Table, stated in a statement to Restaurant Business Magazine, “We pursued every viable alternative to prevent bankruptcy; however, restructuring our debt is the most advantageous course of action for our valued vendor partners, loyal guests, and team members.” “We expect to emerge from this restructuring process stronger and better positioned to prosper in our hyper-competitive industry.”
6. Grilled and Melted
Melt Bar & Grilled, a Cleveland, Ohio-based restaurant chain that is renowned for its exquisite grilled cheese sandwiches, filed for Chapter 11 bankruptcy on June 14. The company has been experiencing difficulty in compensating its vendors, landlords, and service providers, as indicated in the filing.
The chain’s operations have been adversely affected by the “major shifts and changes in the service industry” and the increasing cost of products and labor, according to court documents.
Furthermore, WKYC reports that Melt will be closing its locations in Mentor and Akron, Ohio, this month. Following the closure of these establishments, the chain will have only its Lakewood, Ohio, restaurant, as well as its locations at Cleveland’s Progressive Field and Case Western Reserve University.
In order to undergo renovations and implement additional menu and branding improvements, Melt will temporarily close its Lakewood location on Sept. 2 for a period of seven days. Melt also closed its locations in Independence, Avon, and Cedar Point, Ohio, in 2024.
7. Rubio’s Coastal Grill
Rubio’s officially announced its second Chapter 11 bankruptcy filing on June 5, just a few years after declaring bankruptcy during the COVID-19 pandemic. The chain attributed the relocation to the new $20 minimum wage for fast-food workers in California, declining consumer visits, and soaring costs.
Although Rubio’s shuttered 48 underperforming California restaurants in May to enhance the health of the business, the closures did not resolve the company’s financial difficulties.
Nicholas Rubin, Rubio’s chief restructuring officer, stated in a statement that the company’s capacity to satisfy its debt obligations has been adversely affected by the persistently difficult economic conditions, despite the company’s best efforts to right-size.
Rubio’s was acquired by a new proprietor two months after declaring bankruptcy. The Original Fish Taco LLC, an affiliate of TREW Capital Management restaurant, has acquired the chain for $40 million.
Rubio’s currently maintains 86 establishments in Nevada, Arizona, and California.
8. Red Lobster
Red Lobster filed for Chapter 11 bankruptcy approximately one week after it made headlines for abruptly closing dozens of locations.
In a press release, Jonathan Tibus, CEO of Red Lobster, stated that the bankruptcy will allow the company to “address a number of financial and operational challenges.”
The seafood chain stated that it would utilize the proceedings to enhance operational efficiency, reduce the number of locations, and sell “substantially all of its assets.” According to court documents, Red Lobster’s assets and liabilities are estimated to be between $1 billion and $10 billion.
Red Lobster has encountered numerous challenges throughout the years, such as substantial operating losses and elevated food and labor expenses. These losses encompass the $11 million loss associated with its Ultimate Endless Shrimp agreement.
The company subsequently initiated an investigation into the role that Thai Union, Red Lobster’s erstwhile majority owner, played in the popular promotion, as reported by Reuters.
Fans of Red Lobster are pleased to learn that the seafood chain is receiving a second opportunity in the wake of its financial difficulties.
Fortress Investment Group, a lender, has expressed its intention to acquire Red Lobster in order to rescue it from bankruptcy.
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