The restaurant industry is undergoing massive changes, and since the beginning of 2024, several eateries have already filed for Chapter 11 bankruptcy. The pandemic took its toll, and its effects continued with inflation and worldwide conflicts. Two more chains are thinking about bankruptcy and liquidation, and they will likely not be the only ones.
Customers changed their behavior
After the pandemic emergency ended, many people wanted life to return to normal. But, with the prices increasing, that was impossible, so they had to be more conscious about their spending. With prices rising, people are less likely to support large chain restaurants, and many opt for independent eateries.
The impact
The rise in costs and financial difficulties that have been mounting for years have proved to be too much for many chain restaurants. Many filed for Chapter 11 bankruptcy, which comes with an additional price: job losses. Among restaurants that have already filed for bankruptcy are Tijuana Flats, the Florida-based restaurant chain, Sticky’s Finger Joint from NYC, Red Lobster, and more.
BurgerFi International’s efforts
BurgerFi International owns two popular restaurant chains, Anthony’s Coal-Fired Pizza and Wings. BurgerFi markets its products as superior, but according to Macroaxis, the chains have an over 82 percent probability of filing for bankruptcy. While the restaurants take pride in creating premium products, better ingredients mean higher prices.
BurgerFi shared the concerns
BurgerFi accounted for the fact that the company is looking for alternatives but pointed out that the outcome could be negative. The firm hired Kroll Securities as a financial adviser to help with financial struggles and had already filed documents with the Securities and Exchange Commission.
What’s inside the filing
BurgerFi has filed with the Securities and Exchange Commission, seeking access to liquidity and the ability to enter into a strategic transaction while under bankruptcy protection. The company aims to maintain its listing on the Nasdaq Stock Exchange and continue operating as a going concern.
Outside confirmations
Based on Macroaxis analysis, the company has reportedly failed to meet its financial obligations and has received a delisting notification from Nasdaq. Currently, it holds approximately $4 million in cash and owes $5 million to its creditors.
Troubles from March
BurgerFi reported that it defaulted on its credit agreement due to sales declines, Restaurant Business Online reported. The outlet cited company CEO Carl Bachmann, who was more confident in a positive outcome at the time. This year, the company opened two locations, including Manhattan’s Better Burger Lab.
The chains have over 160 locations
The casual chain restaurant has 59 locations and one franchisee. BurgerFi has 102 locations nationwide, and 27 are corporate-owned, while 75 are franchised. But, the latest reports suggest that their future is highly compromised.
Rubio’s closing dozens of locations
Rubio’s Coastal Grill, the Carlsbad-based restaurant chain famous for its fish tacos, is closing 48 locations in California. Speaking to KTLA, a spokesperson said the rising costs are behind this devastating decision. The restaurant is closing 24 locations in Los Angeles, 13 in San Diego, and the rest are in Northern California.
Fast-food prices outpaced inflation
Kimberly Palmer, a personal finance expert at Nerd Wallet, told USA Today that the rise and rise of fast food prices is upsetting, explaining that it goes against everything people learned to love about these chain restaurants. The Independent found that the price increase was 22% compared to last year.
Drastic changes
McDonald’s offers a $5 value menu this month, while Wendy’s is rolling out a $3 breakfast menu. Burger King will add value deals to their menu in the following months. These value meals are available for a limited time. According to experts, they are seen as a strategy for fast food chains to attract customers by offering more valuable meal options.
Innovations
Many chains also invested in innovations, including BurgerFi and Better Burger Lab. McDonald’s rolled out CosMc’s, which is focused on beverages and could potentially rival Starbucks. The landscape of fast-food restaurants is changing, and it seems it will be the survival of the strongest.
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Kate Smith, a self-proclaimed word nerd who relishes the power of language to inform, entertain, and inspire. Kate's passion for sharing knowledge and sparking meaningful conversations fuels her every word.