Financial distress caused by several challenges, such as effects from the Covid-19 pandemic, rising inflation, and high interest rates, have forced restaurant chains into Chapter 11 and sometimes Chapter 7 bankruptcy.
In some cases, restaurant owners can over-expand their operations, taking on more costs and expenses than they can handle.
Don’t miss the move: Subscribe to TheStreet’s free daily newsletter
Restaurant chains such as Red Lobster, BurgerFi, Rubio’s Coastal Grill, and Buca di Beppo cited Covid, inflation and interest rates as the reasons they needed to filed Chapter 11 this year and close restaurant locations.
Related: Another iconic auto parts brand files for Chapter 11 bankruptcy
Then there are restaurant operators who faced legal challenges that forced them to file for Chapter 11 protection.
The receiver for Oklahoma Apple and three affiliates that operate a chain of 14 Applebee’s Neighborhood Grill & Bar franchise restaurants in four states on Oct. 4 filed for Chapter 11 bankruptcy protection as a creditor and plaintiff in a lawsuit against a former franchisee seeks to preserve the assets of its preference claim.
Oakland, Calif.-based Red Bay Coffee, a chain of six coffee cafes, a roastery, and coffee van, the company said the effects of the Covid pandemic had a long-term impact on its financial situation, but rising costs of two lawsuits filed against the company had pushed the company into filing Chapter 11 on Aug. 29.
Fast-casual restaurant chain Hawkers Asian Street Food on Sept. 16 filed for Chapter 11 bankruptcy to maintain operational control of the company and protect it from an overreaching lender.
The Orlando, Fla.-based Asian restaurant chain’s parent Hawkers Holdings and four affiliates filed petitions in the U.S. Bankruptcy Court for the Middle District of Florida listing $10 million to $50 million in assets and liabilities.
The 15-unit chain in early 2023 signed “a debt capital agreement with the intention of growing the brand into a household name across the United States.” The company’s lender reportedly revealed an intention to gain control of the company, though Hawkers claims it has never missed a loan payment.
Related: Popular grocery chain closes down in bankruptcy liquidation
Sonoma, Calif.-based Mary’s Pizza Shack filed for Chapter 7 protection on Sept. 10, not for financial distress, but for legal housekeeping as a final step of a restructuring to convert the company’s business from a single corporation into single family-owned units.
Indochine Restaurant files bankruptcy to reorganize its debts.
Image source: Shutterstock
Indochine Restaurant chain files Chapter 11 bankruptcy
Popular Asian restaurant chain owner Indochine Restaurant on Oct. 4 filed for Chapter 11 bankruptcy protection to reorganize its business after struggling with debt from an expansion that began following the Covid-19 pandemic, the Port City Daily reported.
More bankruptcy stories:
Popular fast-food chain shuts locations, no bankruptcy plans yetIconic retail food company closing down, no bankruptcy filing yetBankruptcy filing can’t rescue popular retail food brand
The Wilmington, N.C., debtor listed up to $50,000 in assets and $1 million to $10 million in liabilities in its petition filed in the U.S. Bankruptcy Court for the Eastern District of North Carolina in Wilmington. The debtor’s largest unsecured creditors include North State Bank, owed $2.4 million and the U.S. Small Business Administration owed $1.5 million.
The debtor has until Jan. 2, 2025, to file a disclosure statement and reorganization plan.
The Thai-Vietnamese chain consists of five locations, opening its first restaurant Indochine in Wilmington in 2000. The chain began its expansion in 2020 with its Indochine Express eateries in Leland, Southport, and Wilmington, and Asian fusion restaurant Cafe Chinois on South College Road, also in Wilmington, WilmingtonBiz reported. All of Indochine’s locations continue to operate.
Related: Veteran fund manager sees world of pain coming for stocks
