USA- According to a report by seasoned journalist Kirk O’Neil and CNBC, decreasing revenue and financial distress have led many restaurant chains to file for Chapter 11 bankruptcy in the first three quarters of 2024.
According to O’Neil, QSR chains have struggled in 2024 to raise revenue due to rising inflation, high interest rates and shrinking consumer discretionary spending negatively impacts their businesses.
Many fast food chains have filed for Chapter 11 bankruptcy within the first three quarters of the year.
In early April, restaurant chain Tijuana Flats announced new ownership, chapter 11 bankruptcy filing and closure of 11 of its outlets in one press release. The restaurant cited poor financial performance and inflation-induce cost pressures as the reason behind the filing.
In May, seafood giant Red Lobster filed for bankruptcy protection, citing an underperforming restaurant footprint and a difficult macroeconomic environment.
On July 22, EYM Pizza, which operates 140 Pizza Hut locations across three states, failed to raise enough revenue to pay its franchisers’ royalty rates. The shortfall led to a lawsuit between the two entities, prompting the operator to file for bankruptcy.
On June 20, Miracle Restaurant Group, which operates 25 Arby’s outlets in four states filed for Chapter 11 bankruptcy protection to reorganize its business. The operator cited inflation cost pressure and labor expenses as the reason behind the filing.
On August 5, Italian restaurant chain Buca di Beppo also filed for Chapter 11 bankruptcy protection based on labor cost and rising costs.
On August 23, Mediterranean fast casual chain Roti filed for bankruptcy after it struggled to pay suppliers and rent on its 22 locations.
On September 11, BurgerFi International, owner and operator of 144 pizza and burger restaurants, filed for the same level of bankruptcy protection after lower-than-expected financial results.
According to CNBC, at least ten restaurant chains, which do not include multi-unit franchisees, filed for bankruptcy protection in 2024.
These bankruptcy filings reflect the challenging state of the QSR market, which continues to alarm stakeholders. Easing inflation pressures appears to be the most optimal solution to the problem.
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