The Red Lobster logo is seen in front of a closed restaurant in Torrance, California on May 14, 2024.
Patrick T. Fallon | Afp |
The number of restaurant operators filing for bankruptcy has skyrocketed this year, reflecting a general increase in corporate bankruptcies across all industries.
At least 10 restaurant chains, not including franchises with multiple locations, will file for bankruptcy in 2024. In August alone, three well-known restaurants filed for Chapter 11 bankruptcy. The rise in bankruptcies is due to diners spending less, labor costs continuing to rise, and the disappearance of Covid-era government aid.
Several more restaurant chains could file for bankruptcy this year. BurgerFiwhich also owns Anthony's Coal Fired Pizza & Wings, said in a regulatory filing in mid-August that there were “substantial doubts” about the company's ability to continue operating. Other companies, such as Mod Pizza, narrowly avoided bankruptcy by selling at the last minute.
Restaurants aren't the only companies filing for bankruptcy protection as high interest rates weigh on businesses. According to BankruptcyWatch, Chapter 11 bankruptcy filings have increased 49% this year through Aug. 20. Mall retailer Express, nursing home chain LaVie Care Centers and Joann Fabrics and Crafts are among the companies that have filed for bankruptcy protection this year.
Here are the 10 big-name restaurant chains that have filed for bankruptcy protection in 2024:
Roti
Mediterranean fast-casual chain Roti filed for Chapter 11 bankruptcy on August 23. The company said it is working with its landlords and suppliers to keep its 22 stores open while it looks for a new buyer or investors.
The company ran into trouble during the Covid-19 pandemic because about half of its locations were in downtown business districts, CEO Justin Seamonds said in a statement at the time of the bankruptcy filing. New investors helped the company hold on, but the recent decline in consumer spending led to the bankruptcy.
According to Pitchbook, Roti had raised $58 million by June.
Beppo's Hole
People eat outside a Buca di Beppo restaurant in San Diego on August 11, 2020.
Bing Guan | Bloomberg | Getty Images
Buca di Beppo filed for bankruptcy on August 5. The Italian-American chain is keeping 44 of its branches open during the restructuring and is also planning to open another restaurant.
According to court documents, the company attributed its financial difficulties to rising costs and labor problems.
Buca di Beppo was founded in 1993 and sold to Planet Hollywood in 2008 following an accounting scandal involving some of its top executives.
World of Beer
The exterior of World of Beer at Crossgates Mall in Guilderland, New York.
Lori Van Buren/ | Albany Times Union | Hearst Newspapers | Getty Images
The pub chain World of Beer filed for bankruptcy on August 2. The company cited high interest rates, inflation and a slow return to pre-pandemic eating habits as reasons for the bankruptcy.
World of Beer plans to restructure and terminate leases at poorly performing locations through bankruptcy.
The company was founded in 2007, when craft beer was becoming increasingly popular. Today, craft beer sales have declined as consumers in general are drinking less.
Rubio's
Rubio's Restaurants filed for Chapter 11 bankruptcy in June. The fast-casual chain, known for its fish tacos, had 86 branches in California, Nevada and Arizona at the time.
The company said rising food and energy costs, the shift to hybrid work that reduces lunchtime traffic, and California's minimum wage increase put too much pressure on some of its restaurants.
In April, California raised the minimum wage for fast-food workers at chains with more than 60 locations to $20 an hour. A few days before Rubio's filed for bankruptcy, it closed 48 underperforming restaurants in California.
In August, Rubio agreed to a sale to an affiliate of TREW Capital, one of his lenders.
The restaurant company had already filed for bankruptcy under the US Chapter 11 procedure in 2020.
Melt Bar & Grilled
In June, the Cleveland-based chain announced it was having trouble paying its suppliers and landlords and turned to the U.S. Chapter 11 bankruptcy proceedings to save the company.
Known for its grilled cheese sandwiches and craft beer offerings, the company was founded in 2006. At its peak, it had 14 locations, but by the time the company filed for bankruptcy, its presence had shrunk to four restaurants.
Kuma's Corner
Kuma Holdings, the parent company of Kuma's Corner, filed for bankruptcy in June.
The Midwestern burger chain opened its first location in 2005 and stood out from the competition with its metal and punk-inspired menu items.
Red lobster
A menu is displayed on a plate at a Red Lobster restaurant in Austin, Texas on May 20, 2024.
Brandon Bell |
The seafood giant Red Lobster filed for bankruptcy in May, citing “difficult macroeconomic conditions, a bloated and underperforming restaurant chain, failed or ill-considered strategic initiatives and increased competition” as reasons.
One scapegoat for the bankruptcy was the disastrous “Endless Shrimps” commercial in 2023. A less obvious culprit, however, was a leaseback agreement entered into under a previous owner that made Red Lobster's leases too expensive, especially when sales fell.
On Tuesday, the investment group buying Red Lobster named former PF Chang CEO Damola Adamolekun as the company's next leader if it successfully exits Chapter 11 bankruptcy proceedings.
Tijuana Apartments
A Mexican style pizza from Tijuana Flats.
Jeff Greenberg | Universal Images Group |
In April, Tijuana Flats announced a change in ownership, a Chapter 11 bankruptcy filing, and the closure of 11 restaurants in a single press release.
AUA Private Equity Partners sold the fast-casual Tex-Mex chain to Flatheads LLC as part of the restaurant company's restructuring.
The chain was founded in 1995.
Sticky finger joint
Chicken supply chain Sticky's Finger Joint also filed for bankruptcy in April. Rising raw material prices, the impact of the pandemic and legal costs related to a trademark dispute by competitor Sticky Fingers forced the company to restructure.
Sticky's was founded in 2012. According to a court filing, the company had annual revenue of $22 million by 2023.
Boxer Ramen
The Portland, Oregon-based ramen chain filed for Chapter 11 bankruptcy in February and abruptly closed all four of its stores in late April, more than a decade after it was founded.
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