10 of the most serious bankruptcies in the catering industry in 2024

The countless restaurant bankruptcies this year allow for many individual lessons to be learned about tactics that weighed on balance sheets.

But when the records of bankrupt brands and operators reveal specific, flawed business practices like those of Thai Union Group Sale-leaseback process at Red LobsterGiven the sheer number of bankruptcies, are there any generalizable lessons?

The year 2024 offers aspiring corporate pathologists a surplus of branded carcasses: TGI Fridays, Bucca di Beppo, One-table restaurant brands, Rubios And Tijuana apartmentsamong many others, all filed Chapter 11 while Mod Pizza was in short supply avoided the same fate.

So what happened?

The short answer is: rising prices. Restaurants raised prices 30% in five yearsaccording to Bureau of Labor Statistics data compiled by the Federal Reserve Bank of St. Louis, while overall Prices increased by 22% and food prices rose 27%. Eventually, many consumers withdrew. At the same time, It became more difficult to raise capital starting in 2022, when the Federal Reserve began raising interest rates. This tightened the money supply and increased the cost of borrowing.

Strong brands and concepts, particularly fast-casual models, that offer significant perceived value have made it very good in this environment. But brands with weaker value propositions, poorer unit economics and stressed balance sheets fell behind.

“Even in the best of times, there are still businesses that are either stressed or distressed,” Brad Sandler, partner at bankruptcy and restructuring law firm Pachulski Stang Ziehl & Jones, told Restaurant Dive.

Sandler said that overall consumer health was good, but ongoing operational challenges in a low-margin business like restaurants made it difficult for companies with high levels of debt to turn things around.

Bankruptcies are more common in “consumer-facing industries that have been negatively impacted by the economy,” Sandler said. “From supply chain disruptions to rising labor costs to geopolitical tensions, there has been tremendous disruption.”

Local conditions also affected certain brands. Rising labor costs linked to California’s $20 fast food wage helped seal Rubio’s fate. Sticky’s finger joint was particularly injured low foot traffic in Manhattan. This accelerated Roti’s bankruptcy the end of rent deferral agreements. At One Table Restaurants, the parent company of Tender Greens and Tocaya, high commission fees for third-party delivery consumed much of the brands’ revenue. Recovering from COVID-19.

Franchisee bankruptcies, one of 2023 most alarming trendscontinued quickly this year. A Dickey’s Barbecue franchisee filed for Chapter 11 Protection like the chain The branch system shrank. Arby’s franchisee Miracle Restaurant Group went bankrupt over the summer after failing to find a buyer for underperforming units. And at casual dining, Louisiana apple went bankrupt after a creditor sued and Applebee’s took control of its stores.

As the end of the year approaches and some of the 2024 insolvent chains emerge from the Chapter 11 process new plans for turnaroundsTake a look back at some of the most consequential bankruptcies of the year.