Casual restaurant chains have faced an array of problems this year with rising costs of food and labor, higher interest rates on their debt, and consumers being more selective about spending.
Several eateries have closed underperforming locations and some have been forced to file bankruptcy to reorganize their businesses, which may have included shuttering units.
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Bloomin’ Brands (BLMN) , which owns Outback Steakhouse, Bonefish Grill, Fleming’s, Carrabba’s Italian Grill and Aussie Grill earlier this year decided to take aggressive steps to right-size its portfolio and end the drain of underperforming stores by closing 38 U.S. locations and three international ones. The restaurant chain has not filed for bankruptcy, though.
Related: Iconic fast-food chain operator files Chapter 11 bankruptcy
Red Lobster, however, did file for Chapter 11 bankruptcy protection on May 19 with about $300 million in debt and closed over 100 restaurants permanently. The chain now operates about 545 restaurants in 44 states.
Rubio’s Coastal Grill claimed it was victimized by California’s AB 1228, which increased the minimum wage for fast-food workers working at chains that have more than 60 locations in the state from $16 to $20 per hour.
The Mexican fast-casual chain on June 5 filed Chapter 11 bankruptcy and closed 48 locations in the Golden State. It had a total of 134 locations in California, Arizona and Nevada before filing.
Popular Italian restaurant chain Buca di Beppo on Aug. 4 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas in Dallas seeking to reorganize with the support of its lenders after it closed 13 underperforming locations that included restaurants in Sacramento and Salt Lake City. It currently operates 44 core locations in 14 states, two international locations, and it planned to open one new location
Finally, the receiver for a chain of 14 Applebee’s Neighborhood Grill & Bar franchise restaurants in four states on Oct. 4 filed for Chapter 11 bankruptcy protection as a creditor and plaintiff in a lawsuit against a former franchisee seeks to preserve the assets of its preference claim.
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Michael Goldberg, receiver for franchisee Oklahoma Apple LLC and affiliates Louisiana Apple LLC, Kentucky Apple LLC, and Mountain Apple LLC, filed his petition in the U.S. Bankruptcy Court for the Southern District of Florida listing up to $50,000 in assets and liabilities.
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A judge in the U.S. District Court for the Southern District of Florida in September appointed Goldberg receiver for the franchise restaurants located in Arkansas, Indiana, Kentucky, and Oklahoma at the request of City National Bank of Florida.
The bank on Aug. 28 sued the former franchisee Louisiana Apple and its affiliates in the same district court for alleged breach of contract for defaulting on $8.33 million in loan principal, interest, and fees and for disposing of the loan’s collateral. The former franchisee allegedly transferred ownership to SBG Apple Central I LLC and affiliated entities that are wholly owned by Starboard Group Holdings without the bank’s consent, according to court papers.
Several months after City National Bank entered into a forbearance agreement with Louisiana Apple, the former franchisee allegedly entered into a separate agreement with Dine Brands Global’s (DIN) franchisor, Applebee’s Franchisor LLC and SBG to transfer full control over its franchise assets, as well as operation of the restaurants, to SBG, according to court papers.
Any further disputes by the parties involved will be resolved in the bankruptcy court, which now has jurisdiction.
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