The restaurant sector has entered 2025 with continued economic distress, as struggling dining establishments continue filing for bankruptcy and selling or closing locations.
Popular Italian restaurant chain Buca di Beppo filed for Chapter 11 protection on Aug. 4 to reorganize its business with the support of its lenders after closing 13 underperforming locations in the week before it filed for bankruptcy.
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The company had 44 remaining locations in 14 states after the closings and sold its remaining assets to its prepetition lender Main Street Capital Corp. for a $27 million credit bid after it received no other qualified bids for a bankruptcy auction.
Related: Bankrupt pizza chain operator sells dozens of locations
Bankrupt Pizza Hut franchisee EYM Pizza L.P., which once owned 142 of the chain’s franchise locations, filed for bankruptcy protection on July 22, 2024, and sold 77 of its restaurants in Georgia, Illinois, South Carolina, and Wisconsin to six separate bidders at a bankruptcy auction for about $11.78 million.
The franchisee closed 15 locations in Indiana and Ohio in July 2024 before filing for bankruptcy and will end up closing another 50 locations in 2025 that it has not been able to sell.
TGI Fridays is selling or closing its remaining 30 corporate-owned locations.
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TGI Friday’s to close or sell its remaining locations
Finally, bankrupt casual dining chain TGI Friday’s Inc. filed motions in a bankruptcy court on Jan. 28 that may result in a sale of 18 of its remaining 30 company-owned locations to two bidders. It is also likely to close its remaining 12 restaurants after rejecting their leases.
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TGI Friday’s seeks to sell 15 of its 30 corporate-owned locations to Yadav Enterprises Inc. and Turn Table Acquisitions LLC for a $3 million credit bid and three locations to Sugarloaf Concessions LLC for $100,000 and payment of all lease and sales tax associated cure amounts.
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The debtor said in court papers that it plans to reject leases and shut down the remaining 12 company-owned locations that have not received any bids or interest from potential buyers.
TGI Friday’s said in court papers that it needed to reject the leases and close its remaining restaurants since its budget did not provide for February rent payments and the company’s liquidity would be strained if required to make February rent payments.
The company also said that it did not have the funds necessary to continue operating its remaining locations after Jan. 31, 2025.
The company said that before it received the bids to purchase the 18 locations, it planned to terminate all operations at the 30 remaining locations.
TGI Friday’s already closing locations
TGI Friday’s already began closing locations before Jan. 31, as four Southern Nevada locations in Boyd Gaming casinos — Aliante, The Orleans, Gold Coast, and Sam’s Town — had already closed by Jan. 29, the Las Vegas Review-Journal reported.Â
The sales and lease rejections require final approval from the bankruptcy court for the deals to close. Judge Stacey G. Jernigan’s orders on the sales and lease rejections had not yet been filed on Jan. 31.
TGI Friday’s Inc. on Jan. 2 won approval to sell nine of its most successful restaurant locations to franchisee Mera Corp. for $34.5 million, which includes cure costs and assumed liabilities.
The debtor on Nov. 2 filed for Chapter 11 seeking to reorganize its business, which included plans for a sale of certain company assets, further reduction of its restaurant footprint, and rejection of unfavorable leases and contracts.
TGI Friday’s Inc.’s 122 franchised locations in the United States and 316 franchised units outside the U.S. were not included in the bankruptcy.
The debtor asserted that lingering effects from the Covid-19 pandemic, a volatile macroeconomic environment, global inflation, significant interest rate increases, and rising costs led to the financial distress that forced a bankruptcy filing, court papers said.
The Dallas-based restaurant chain, which operated 39 corporate-owned locations in the U.S. when it filed bankruptcy, listed $100 million to $500 million in assets and liabilities in its petition filed in the U.S. Bankruptcy Court for the Northern District of Texas.
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