Rising expenses driven by higher rents and increasing labor costs have pushed a number of restaurant chains to the brink of survival. Add in that many chains have carried additional debt due to losses incurred during the Covid pandemic, and you have a situation that has forced many chains to fail.
In addition, there’s pressure from consumers to offer lower prices, which the big chains have been doing. When McDonald’s admits that consumers want more value and offers a $5 meal deal, that makes it very hard to compete.
Related: Another coffee, cafe and bakery chain files Chapter 11 bankruptcy
Even chains like Chipotle, which has typically said that it can raise prices and people will still pay have faced a backlash. Social media videos have pushed back at the chain for offering smaller portions at higher prices although those efforts have not worked as overall sales grew by 14.1% and same-store sales rose by 7%.
Still, even as Chipotle bucks the trend, consumers have been pushing for value and that’s much harder for smaller chains to offer. McDonald’s, Chipotle, Wendy’s, and other massive chains might take a profit hit due to increased labor costs, but they have massive buying power and can pull multiple levers to control expenses.
Smaller chains cannot do that and financial problems have pushed a smaller fast food/fast casual chain to the brink.
McDonald’s recently introduced a $5 value meal that looks a lot like the Wendy’s Biggie Bag.
Image source: Cate Gillon/Getty Images
Melt Bar and Grill has a bold mission
It’s hard to classify Melt Bar and Grill. The chain has been built around grilled cheese, a comfort food classic that could be considered fast food, and craft beer, which is not traditionally sold in fast food restaurants.
The chain even admits that’s it’s hard to define on its website.
“It’s an energetic and eclectic gourmet comfort food restaurant. It’s a relaxing neighborhood craft beer bar. It’s a genuinely all-inclusive gathering place that welcomes everyone: tats and suits, moms and rockers, locals and visitors. It’s a melting pot and meeting spot for all,” the company posted.
The chain was created by Matt Fish, a Cleveland musician and chef who loves craft beer and the grilled cheese sandwich.
“Matt’s vision was to bring classic American dishes to the table in an unpretentious and fun way because everyone can relate to a grilled cheese sandwich,” the chain shared. “The answer to ‘What is Melt?’ isn’t just bread, cheese, craft beer, music, and atmosphere, it’s the chemistry of it all – the way it comes together- that makes Melt unique. It’s a certain magic that can’t easily be explained, it must be experienced.”
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That’s a bold vision, but it did not keep the chain from filing Chapter 11 bankruptcy on June 14. The company hopes to be able to reorganize its finances in order to survive and it recently won a small court victory that will keep it open (for now).
Melt Bar and Grill gets a small bankruptcy win
“Navigating the restaurant industry in the post-pandemic world with growing economic issues is becoming increasingly difficult,” Melt founder Matt Fish said in a statement. “The world and the industry are rapidly changing around us. After careful consideration, Melt Bar and Grilled has decided to file Chapter 11 Bankruptcy. This gives us the best opportunity to reorganize and rebuild the company.”
At the time of its filing, Melt Bar and Grill in U.S. Bankruptcy Court in the Northern District of Ohio Melt shared that it has assets between $500,001 and $1 million with liabilities between $1 million and $10 million.
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Judge Alan M. Koschik, who is overseeing the bankruptcy, “granted an emergency order in the case on June 21, which will allow the chain to pay $100,000 in “wages, salaries and employee benefits” through a KeyBank payroll account, as well as reimburse employee business expenses from the pay period through June 14. However, the order also blocks Melt from paying “severance, vacation pay or bonuses” without additional action from the judge,” NBC 4 Ohio reported.
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That order allows the chain to keep operating while it negotiates with its creditors.
Koschik scheduled a status conference in the bankruptcy case for Aug. 6. He gave all of Melt’s creditors, excluding government agencies, a deadline of Aug. 27 to file claims on Melt’s assets, according to the news website.
