Major US Restaurant Franchisees File for Bankruptcy Protection
Several large US restaurant franchisees filed for Chapter 11 bankruptcy as rising production costs and declining guest traffic strained operations.
Several major fast-food and restaurant franchisees in the United States have filed for Chapter 11 bankruptcy protection, citing a combination of rising production costs and declining guest traffic. Among the filings, Out West Restaurant Group, also known as Cerca Trova Restaurant Group, filed in Delaware with debts reaching approximately $449 million by 2026. The company's financial distress was driven by pandemic-related revenue losses and minimum wage increases in California.
Other significant filings include Meritage Hospitality Group, one of the largest Wendy's franchisees, which filed in September after closing 60 underperforming locations. Another 60 sites may close by mid-November. Additionally, Memphis-based Global Midsouth Holding Corp., a franchisee for Checkers and Rally's, filed for bankruptcy on October 28 to prevent a foreclosure auction.
In response to the Out West Restaurant Group filing, Bloomin' Brands has offered $26.3 million to acquire the group's assets. The offer includes up to $5.5 million in emergency financing to maintain current operations. David Goronkin, CEO of Out West Restaurant Group, noted that earnings continued to decline while food and labor costs rose.
