Fast-food restaurant chains have faced financial distress over the last year with chains representing several different concepts heading for bankruptcy court to reorganize their businesses and restructure their debt.
No matter the concept — burgers, pizza, fried chicken, sandwiches — fast-food chains have lined up to file for Chapter 11 bankruptcy after facing economic problems.
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The major culprits causing distress have been rising inflation that has increased the costs of labor, supplies, and food ingredients; higher interest rates that have raised the price of debt; and changes in customers’ dining preferences. Many consumers are watching their budgets and spending habits because of uncertainty regarding the nation’s economy.
Related: Popular restaurant chain plans to file Chapter 11 bankruptcy
Two fast-food burger chains faced bankruptcy filings toward the end of 2024 as BurgerFi International, which operated 144 burger and pizza restaurants nationwide, on Sept. 11 filed for Chapter 11 protection to reorganize its business after its turnaround plan failed to produce the results it was expecting.
Also, The Little Mint Inc., the parent company of the Hwy 55 Burger Shakes & Fries restaurant chain, filed for Chapter 11 bankruptcy on Dec. 31 suffering from costs and labor shortages related to the Covid-19 pandemic, which coincided with its brand expansion, according to a company statement.
Top restaurant bankruptcies in 2024.
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The debtor operated 22 corporate-owned Hwy 55 locations and has 71 franchised locations in the Southeast. The Mount Olive, N.C., debtor closed 13 corporate-owned locations before it filed for Chapter 11 protection.
Fried chicken fast-food operators didn’t escape bankruptcy court as Popeyes franchisee RRG Inc., which operated 17 locations in Georgia, in February 2024 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Georgia citing three underperforming locations for causing the company’s distress.
Pizza Hut franchisee files for bankruptcy
No one ever wants to see their favorite pizza parlor having financial problems, but EYM, which operated 142 Pizza Hut locations in Texas, Wisconsin, and Ohio, filed its Chapter 11 petition in July 2024, since it didn’t have enough capital to pay its franchise royalties to Yum Brands (YUM) .
Related: Another popular restaurant chain files for Chapter 11 bankruptcy
EYM sold 77 of its locations to six separate bidders at an auction. The franchisee had closed 15 of its locations in Indiana and Ohio in July 2024 before filing for bankruptcy and will end up closing another 50 locations that it has not been able to sell.
Sandwich chains have faced economic issues too, as Arby’s franchisee Miracle Restaurant Group, which operated 25 units in Illinois, Indiana, Texas, Mississippi, and Louisiana, in June 2024 filed for Chapter 11 protection after the effects of the Covid-19 pandemic and the rising costs of products and labor expenses from inflation caused financial distress.
More bankruptcy:
Popular breakfast dining chain files for Chapter 11 bankruptcyHuge national car wash chain files Chapter 11 bankruptcyTroubled trucking company files for Chapter 11 bankruptcy
Also, popular Arizona fast-food sandwich chain Eegee’s filed for Chapter 11 bankruptcy on Dec. 6, 2024, with plans for a streamlined restructuring process after closing five locations.
Schlotzsky’s Deli franchisee files for Chapter 11 bankruptcy.
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Schlotzsky’s Deli franchisee files for Chapter 11 bankruptcy
And now popular Schlotzsky’s Deli franchisee Van Scoit Services LLC on Feb. 25 filed a Chapter 11 Subchapter V bankruptcy petition to reorganize its businesses.
The Hurst, Texas-based debtor listed up to $50,000 in assets and $500,000 to $1 million in debts in its petition filed in the U.S. Bankruptcy Court for the Northern District of Texas.
Van Scoit Services, which has been a Schlotzsky’s franchisee for over 25 years according to owner Julio Van Scoit’s LinkedIn page, listed six franchises in its bankruptcy petition.
The debtor did not state specific reasons for filing for bankruptcy.
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