The Red Lobster logo is displayed outside a closed restaurant in Torrance, California, on May 14, 2024.
Patrick T. Fallon | AFP | Getty Images
The number of restaurant bankruptcy filings has spiked this year, reflecting a general increase in business bankruptcies across all sectors.
At least 10 restaurant chains, not including multi-unit franchisees, have filed for bankruptcy by 2024. August alone saw three Chapter 11 filings from high-profile restaurants. The surge in bankruptcies comes as diners cut back on spending, labor costs continue to rise, and government support from Covid fades.
Several other restaurant chains could file for bankruptcy before the end of the year. BurgerFialso owns Anthony’s Coal Fired Pizza & Wings, said in a submit application as prescribed in mid-August that there was “substantial doubt” about the company’s ability to operate. Others, such as Mod Pizza, have narrowly avoided bankruptcy through a last-minute sale.
Restaurants aren’t the only companies seeking bankruptcy protection as high interest rates weigh on businesses. As of August 20, Chapter 11 filings were up 49% this year, according to BankruptcyWatch. Express Mall RetailerLaVie Care Centers nursing home chain and Joann Fabrics and Crafts are among the companies that have filed for bankruptcy this year.
Here are 10 notable restaurant chains that filed for bankruptcy in 2024:
Roti
Mediterranean fast-casual restaurant chain Roti filed for Chapter 11 bankruptcy protection on August 23. The company said it is working with landlords and suppliers to keep its 22 locations open while it searches for a new buyer or investor.
The company began to struggle during the Covid-19 pandemic because nearly half of its locations are in downtown business districts, CEO Justin Seamonds said in a statement at the time of the bankruptcy filing. New investors helped keep the company afloat, but the recent downturn in consumer spending has led to the insolvency.
As of June, Roti had raised $58 million, according to Pitchbook.
The Story of Beppo
People eat outside the Buca di Beppo restaurant in San Diego on August 11, 2020.
Bing Guan | Bloomberg | Getty Images
Buca di Beppo declared bankruptcy on August 5. The Italian-American restaurant chain is keeping 44 locations open while it restructures and also plans to open one more restaurant.
The company blamed its financial difficulties on rising costs and labor challenges, according to court filings.
Buca di Beppo was founded in 1993 and sold to Planet Hollywood in 2008, following an accounting scandal involving several of the company’s senior executives.
World of beer
Outside World of Beer at Crossgates Mall in Guilderland, New York.
Lori Van Buren/ | Albany Times Union | Hearst Newspapers | Getty Images
Pub chain World of Beer filed for bankruptcy on August 2. The company blamed high interest rates, inflation and a slow return to pre-pandemic dining habits.
World of Beer plans to restructure and terminate leases at underperforming locations through bankruptcy.
The company was founded in 2007, when craft beer was all the rage. Today, craft beer sales have declined as consumers in general drink less.
Rubio’s
Rubio’s Restaurants filed for Chapter 11 bankruptcy protection in June. The fast-casual restaurant chain, known for its fish tacos, had 86 locations at the time across California, Nevada and Arizona.
The company said rising food and utility costs, a shift to hybrid work that has reduced lunchtime traffic and a rising minimum wage in California have put too much pressure on some of its restaurants.
In April, California has raised its minimum wage. for fast-food workers at chains with more than 60 locations at $20 an hour. Days before filing for bankruptcy, Rubio closed 48 underperforming restaurants in California.
In August, Rubio agreed to sell to an affiliate of TREW Capital, one of the lenders.
The restaurant company previously filed for Chapter 11 bankruptcy in 2020.
Melt Bar & Grill
In June, the Cleveland-based chain said it was having trouble paying suppliers and landlords and filed for Chapter 11 to save the business.
The company, known for its grilled cheese sandwiches and craft beer, was founded in 2006. At its peak, the company had 14 locations, but by the time it filed for bankruptcy, it had dwindled to just four restaurants.
Kuma’s Corner
Kuma Holdings, the parent company of Kuma’s Corner, filed for bankruptcy in June.
This Midwestern burger chain opened its first location in 2005, distinguishing itself from the competition with its metal and punk-themed dishes.
Red Lobster
A menu is displayed on a plate at a Red Lobster restaurant in Austin, Texas, on May 20, 2024.
Brandon Bell | Getty Images
Red Lobster Giant Seafood filed for bankruptcy protection in May, citing “difficult macroeconomic environment, cumbersome and inefficient restaurant operations, unsuccessful or ill-advised strategic initiatives, and increasing competition.”
One scapegoat for the company’s insolvency was its disastrous “endless shrimp” promotion in 2023. But a less obvious culprit was a leaseback agreement struck under the previous owner that made Red Lobster’s lease too expensive, especially as sales declined.
On Tuesday, the investment group that bought Red Lobster named former PF Chang CEO Damola Adamolekun as the company’s next leader if it successfully exits Chapter 11.
Tijuana Apartment
A Mexican pizza at Tijuana Flats.
Jeff Greenberg | Universal Pictures Group | Getty Images
In April, Tijuana Flats announced a new owner, filed for Chapter 11 bankruptcy, and closed 11 restaurants in a single press release.
AUA Private Equity Partners has sold the casual Tex-Mex restaurant chain to Flatheads LLC as part of the restaurant company’s restructuring.
This chain of stores was founded in 1995.
Sticky’s Finger Joint
Fried chicken chain Sticky’s Finger Joint also filed for bankruptcy in April. Rising commodity costs, fallout from the pandemic and legal costs from a trademark lawsuit brought by rival Sticky Fingers forced the company to restructure.
Sticky’s was founded in 2012. According to court filings, the company’s annual revenue will be $22 million by 2023.
Boxer Noodles
The Portland, Oregon, ramen restaurant chain filed for Chapter 11 bankruptcy protection in February. In late April, it abruptly closed all four locations, more than a decade after the chain was founded.
