While big-name retailers have hogged a lot of the bankruptcy headlines, that’s not the only sector facing huge postpandemic financial woes.
In many ways, the same factors that drove Bed Bath & Beyond, Tuesday Morning and Christmas Tree Shops out of business have hit some popular fast-food chains. During the long lockdown and social-distancing periods, many retailers had to close their stores while restaurants went to pickup, drive-through and delivery.
Related: Another national retailer faces Chapter 11 bankruptcy, default
The biggest restaurants and retailers had the digital infrastructure to mitigate and get around some of the covid-related restrictions. In the retail space, many customers who might have gone to some of the companies that went out of business went to Amazon, Walmart, Target, Costco and other titans.
In the restaurant space, chains like McDonald’s and Starbucks, which had built up their digital, drive-through and delivery capacity, took business from lesser players who didn’t. Those chains did not invest in digital channels because they hardly expected a pandemic. But when covid happened, the rich got richer and lesser players suffered.
Multiple major fast-food franchisees went bankrupt including two major Restaurant Brands International (QSR) – Get Free Report Burger King operators. In addition, Boston Market stands on the brink of insolvency while a number of smaller regional chains disappeared entirely.
Now, another popular regional fast-food chain is about to disappear, but it’s not a Chapter 7 or Chapter 11 bankruptcy filing. Instead, the brand’s owner is doing something else entirely.
Two major Burger King franchise operators went bankrupt in 2023.
Image source: Chen Jianli/Xinhua via Getty
Another fast-food brand going away
While Bagger Dave’s may not be a nationally known player, it was a popular brand in Michigan that once operated 28 stores. The chain currently operates locations in Michigan, Indiana and Ohio.
A burger chain, Bagger Dave’s also offers pizza, which sets it apart from the traditional fast menus at Burger King, McDonald’s and Wendy’s. Pizza isn’t just a menu tack-on at the chain; it’s made in a pizza oven in the same way dedicated pizza restaurants make it.
Over the past year, Bagger Dave’s has slowly shrunk, with most of its locations quietly shutting down.
The chain’s operator, BT Brands (BTBD) – Get Free Report, which owns about 40% of the stock outstanding, plans to review strategic alternatives for the chain. That usually means a sale or a shutdown, and sometimes a bankruptcy filing, but that’s not what’s happening here.
Bagger Dave’s brand is going away
Instead of bankruptcy or a sale, BT Brands plans to convert the remaining Bagger Dave’s locations into an as-yet-undecided new concept.
“As part of this review, it is anticipated that a proposal will be made to Bagger Dave’s shareholders to change the name of Bagger Dave’s to align the name appropriately with a new business strategy,” BT Brands shared in a news release.
More Fast Food:
Beloved fast-food chain faces bankruptcy as many locations close Burger King Menu adds trendy new Whopper nationwide McDonald’s menu brings back a fan favorite (with a catch)
The brand’s chief executive, Gary Copperud, says that while Bagger Dave’s may not be the right concept, another restaurant at the remaining locations might be successful.
“All six stores are in excellent locations representing an original investment of more than $5 million,” he said. “The stores range from 4,000 to 6,000 square feet, carry full liquor licenses, and are in excellent physical condition. We have had several restaurant professionals look at the locations over the last year, and all agree the units provide an outstanding footprint for a conversion opportunity,”
While the company evaluates its operations, the remaining Bagger Dave’s locations will continue to operate. The company expects the conversion process to begin later this year.
“We look forward to identifying a dynamic growth opportunity, providing potential career growth for all current employees of Bagger Dave’s,” the company added. “We see the opportunity for Bagger Dave’s shareholders, including BT Brands, to earn significant returns from a successful conversion.”
Related: Veteran fund manager picks favorite stocks for 2024
