The chain restaurant sector has struggled to recover since the Covid-19 pandemic downturn in 2020.
Restaurant operators have faced financial distress from a number of economic problems, including rising labor and product costs caused by inflation, rising equipment costs, supply chain difficulties and increased interest rates.
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Most restaurant chains have been able to restructure their debts out of court to give them breathing room as they try to recover, while some others run out of options and usually file for Chapter 11 bankruptcy to reorganize or possibly sell their assets.
Related: Another popular burger chain files for Chapter 11 bankruptcy
Restaurant companies in severe financial shape with no viable solution to reorganize will file for Chapter 7 liquidation and shut down operations.
Among the restaurant chains filing for Chapter 11 in 2024 were Mount Olive, N.C.-based burger chain Hwy 55, whose parent The Little Mint Inc. filed its petition to reorganize on Dec. 31. The debtor operates operates 22 corporate-owned and 71 franchised locations.
Another burger chain, BurgerFi International, on Sept. 11 filed for Chapter 11 protection seeking to sell its assets. The debtor, which owned and franchised 144 burger and pizza restaurants nationwide, sold its assets to TREW Capital Management, which purchased the fast-food chain owner out of bankruptcy with a $10 million credit bid in November 2024.
TREW subsequently sold the 85-unit BurgerFi brand to rival Savvy Sliders for an undisclosed amount in December 2024 after the burger chain exited bankruptcy.
TGI Fridays sold nine of its top locations in a bankruptcy auction.
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TGI Friday’s sells some of its top locations
And now, bankrupt 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.
Related: Popular beverage chain files for Chapter 11 bankruptcy
Mera Corp., which was founded in 1991, owns restaurant franchises in 18 airport terminals and two cruise ports in five countries. The Cancun, Mexico-based franchisee operates 185 units with 53 different brands, including TGI Friday’s, Bubba Gump, Margaritaville, and Johnny Rockets, according to its website.
Under the sale order, Mera acquired five TGI Friday’s locations at Dallas Fort Worth International Airport and four locations in Maryland after winning a bankruptcy auction on Dec. 27, according to court papers.
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Mera outbid former TGI Friday’s CEO Ray Blanchette’s Sugarloaf Hospitality bid of $32.5 for the assets.
Former CEO will manage TGI Friday’s franchises
TGI Friday’s, however, on Jan. 2 named Blanchette to manage over 400 of the company’s global franchised restaurants, the Wall Street Journal reported.
Blanchette replaced a consulting firm that was hired to manage the franchises after TGI Friday’s on Sept. 2 lost control of the restaurants when it violated loan covenants.
TGI Friday’s 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 Fridays’ 122 franchised locations in the U.S. 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. at the time of its filing, 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.
The debtor listed $46.8 million in funded term-loan and revolving-credit debt and interest obligations. It also reported $104 million owed to unsecured creditors
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