In 2024, along with the increasing bankruptcy filings in various industries, the number of chain restaurants filing for bankruptcy in the United States has surged. At least 9 chain restaurants, excluding multi-sector franchisees, have filed for bankruptcy. In August alone, 3 well-known restaurants applied for Chapter 11 bankruptcy protection.
According to CNBC, the bankruptcy filings of restaurants continue to rise due to fewer diners dining out, escalating labor costs, and the disappearance of government subsidies post-COVID pandemic.
Here are 10 famous chain restaurants that have filed for bankruptcy protection in 2024:
Mediterranean fast-food chain Roti filed for Chapter 11 bankruptcy protection on August 23. The company stated that they are working with landlords and suppliers to keep 22 stores operational while seeking new buyers or investors.
CEO Justin Seamonds mentioned in a statement during the bankruptcy filing that they faced difficulties during the COVID pandemic as about half of their stores were located in downtown business districts.
Although the restaurant survived the pandemic with the help of new investors, it couldn’t turn the tide. Due to recent declines in consumer spending, Roti filed for bankruptcy.
Italian restaurant Buca di Beppo announced bankruptcy on August 5. During the restructuring, it retained 44 stores and planned to open another restaurant.
The company attributed its financial difficulties to rising costs and recruitment challenges, as stated in court documents.
World of Beer, a chain of beer stores, applied for bankruptcy protection on August 2, citing high interest rates, inflation, and slow recovery of dining habits pre-pandemic.
World of Beer plans to restructure through bankruptcy and terminate leases of underperforming stores.
Mexican restaurant Rubio’s Restaurants filed for Chapter 11 bankruptcy protection in June. This fast-food chain known for its fish tacos had 86 stores in California, Nevada, and Arizona at the time.
The company cited rising costs of ingredients and utilities, reduced lunchtime traffic due to remote working, and the significant pressure brought by the increased minimum wage in California on some of its restaurants.
Days before filing for bankruptcy, Rubio’s closed 48 underperforming restaurants in California. In August, Rubio’s agreed to sell to an affiliate of one of its investors, TREW Capital.
In June, the Cleveland-based chain stated it struggled to pay suppliers and landlords. The company was known for grilled cheese sandwiches and craft beers. At its peak, it had 14 stores, but by the time of filing bankruptcy, it had scaled down to 4 restaurants.
Seafood giant Red Lobster filed for bankruptcy protection in May due to a challenging macroeconomic environment, bloated restaurant sizes, poor performance, failed company strategies, and intensified competition.
Red Lobster launched a disastrous “unlimited shrimp” promotion in 2023, and its leaseback agreement with the former owner made its rent too costly, especially with declining sales.
On August 26, the investment group that acquired Red Lobster appointed a former executive of the Chinese restaurant chain P.F. Chang’s China Bistro as CEO.
Red Lobster had already closed over 100 of its restaurants earlier in the summer. The chain currently has approximately 500 stores in North America, significantly down from 650 last year.
The remaining four bankrupt restaurants include Chicago burger joint Kuma’s Corner, Mexican restaurant Tijuana Flats, chicken chain Sticky’s Finger Joint, and Boxer Ramen chain in Oregon.
By the end of this year, several more chain restaurants may file for bankruptcy, including Anthony’s Coal Fired Pizza & Wings and Mod Pizza.
The restaurant industry is not the only sector seeking bankruptcy protection; the pressure brought by high interest rates affects businesses across the board.
According to BankruptcyWatch, as of August 20, the number of Chapter 11 bankruptcy protection applications in 2024 has risen by 49%, including mall retailer Express, nursing home chain LaVie Care Centers, and interior decorating store Joann Fabrics and Crafts.