A big Burger King franchisee out of Florida and Georgia filed for bankruptcy protection this week amid heavy debt, weak sales and just months after settling a dispute with the franchisor over remodels.
Consolidated Burger Holdings operates 57 locations. The company declared bankruptcy with $36.6 million in total debt, including more than $14 million in secured debt. It generated operating losses in each of the past two years and was down to less than $179,000 in cash before seeking Chapter 11 bankruptcy protection.
The franchisee hopes to use the bankruptcy process to cut debt and find a buyer.
In court documents, the operator blamed the loss of traffic coming out of the pandemic, which led to declining revenue. The company also said that higher costs for food and a decreased availability of labor exacerbated the issues.
With a heavy debt load, the decline in revenue worsened the company’s cash flow issues. While some of the franchisee’s restaurants are profitable, others are not, which has made it tough for the company to pay its bills.
Consolidated spent months marketing its restaurants for sale through an investment banker. Despite numerous calls with potential acquirers, the company could not find a buyer.
But Burger King also filed a lawsuit against the franchisee in January of 2024 over the operator’s apparent failure to remodel some of its restaurants. Burger King and Consolidated reached a settlement in September of last year amid the franchisee’s sale process.
Burger King struggled coming out of the pandemic as the chain’s marketing efforts didn’t take hold, which created problems in a system with high costs and relatively low average unit volumes. Burger King stores generate less than half the per-store revenue as rival McDonald’s, for instance, and about $500,000 less than the average Wendy’s location.
Many of the chain’s operators also are large and have a lot of debt. As such, a handful of the chain’s major franchisees either filed for bankruptcy since 2023 or came close to it.
Overall, several restaurant companies have filed for bankruptcy over the past couple of years amid high costs and weak sales. At Burger King, system sales grew just 0.2% in 2024 amid a weak overall environment for fast-food chains.
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