Financing

Restaurants’ looming debt problem

This episode of RB’s podcast, "A Deeper Dive," discusses how more chains face problems with falling sales and too much leverage.
Photograph: Shutterstock

A Deeper Dive

For much of the past decade, restaurants have been able to borrow money from an increasing number of willing lenders.

Kevin Burke

After three years of falling sales, some of this excess is coming home to roost.

In this week’s edition of Restaurant Business' podcast, "A Deeper Dive," Executive Editor Jonathan Maze speaks with Kevin Burke, founder and managing partner of Trinity Capital. They discuss some of the financial challenges some chains are having in this environment, and whether those issues are expected to continue.

In recent weeks, companies such as Taco Bueno and the parent company of Papa Gino’s and D’Angelo Grilled Sandwiches filed for bankruptcy protection. Each had more than $100 million in debt and a lot of leased locations.

The bankruptcy filings at the chain highlight what happens when companies put too much debt on their books. They can’t make investments or keep up with capital costs. They cut labor and other spending, hurting customer service. And customers, flush with choices, go eat someplace else.

Please have a listen.

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