This is from the weekly restaurant finance newsletter The Bottom Line. To get this in your inbox every Monday morning, click here.
It is not easy being a franchisee of a fast-food restaurant in 2026.
We wrote about the bankruptcy filing of Superior Star, which at one point operated 93 Hardee’s restaurants in several states in the Midwest. My colleague Alicia Kelso wrote about the bankruptcy filing of a Mountain Mike’s franchisee.
Companies file for bankruptcy for a wide range of reasons. The Hardee’s bankruptcy, for instance, appears to be a failed acquisition. But the filings are the latest in a series of bankruptcies by multi-unit franchisees, mostly from struggling brands, many of which use emergency financing methods like merchant cash advances.
Contrast that with the likely IPOs this year of franchisors Jersey Mike’s and Inspire Brands. Franchisors are in heavy demand from investors because of their profitability, paving the way for such offerings. But investors want nothing to do with actual restaurant operations, which has damaged the valuation of companies with a lot of owned restaurants.
That is because operating a restaurant is less profitable today than it was in 2019. These restaurants have fewer customers, despite more technology and more ordering channels than ever. Costs have exceeded menu-price increases, yet customers consider them too expensive.
The result is a lot of franchisees struggle, turn to questionable financing strategies and in many cases end up in bankruptcy. Until the economics at many of these brands improve, the environment for these brands will remain tough.
This week’s financial news
We spent a long day with McDonald’s last week. We tried their new hand-breaded chicken and offered thoughts. We were also taken to the chain’s super-secret warehouse where it keeps its new prototype. It’d have been cooler had they blindfolded me, but that was probably not necessary because I wasn’t paying attention and probably couldn’t find it if I tried.
Average-unit volumes really matter. Just ask the burger business.
Sysco is taking some risks in buying Restaurant Depot. But that profit is too attractive.
My colleague Joe Guszkowski looked at the downfall of full-service Mexican chains. I miss Don Pablo’s.
Can Jersey Mike’s get to 15,000 global locations? Does that even matter?
Taco Bell is planning even more drive-thru AI.
Number of the week
Want growth? Keep your unit volumes healthy. This shows the median five-year sales growth based on burger chain average-unit volumes. Those with more than $2 million volumes have grown at a much faster rate.
Quote of the week
“Anything that would harm Jetro Restaurant Depot’s relationship with its members and lead to lower membership renewal rates or reduced spending by members in Jetro Restaurant Depot locations could materially adversely affect” Restaurant Depot’s and Sysco’s results. This is from the SEC filing detailing Sysco’s proposed acquisition of Jetro Restaurant Depot. The biggest risk for Sysco is messing with restaurants’ love of Restaurant Depot, specifically its prices.
On the blog
I wrote about burgers and hand-breaded chicken. Check out all my blog posts on The Bottom Line.
On the podcasts
On A Deeper Dive I chatted with Nick Marsh about careful growth. On The Week in Restaurants we talked Jersey Mike’s, Wonder and McDonald’s.
For questions, comments or story ideas, send me an email at jonathan.maze@informa.com. And follow me on Twitter at @jonathanmaze. And also LinkedIn. And TikTok.