A wave of bankruptcies hits the restaurant industry

It’s not an easy time to run a restaurant. Costs are rising, interest rates remain high and many consumers are tightening their budgets. There’s little room for error.

All of that has led to half a dozen restaurant bankruptcies this year and has pushed several other companies to the brink of filing. In many cases, macroeconomic challenges plus corporate missteps were to blame. 

On the bright side, several of the bankrupt businesses said the painful process would allow them to reemerge in a better place. In fact, one already has.

Here’s a look at the latest.

The Florida-based chain of Tex-Mex restaurants last week declared Chapter 11 bankruptcy, closed 11 restaurants and said it’s being sold to a new ownership group.

Tijuana Flats began 2024 with 105 corporate and 26 franchised locations, and has closed 40 of them since then.

In court documents, the company blamed its problems on “a confluence of adverse events,” including menu changes that slowed service and increased costs.

The owner of the 40-unit Illinois-based ice cream chain filed for Chapter 11 bankruptcy last week.

According to the filing, the company got into trouble after investing too little in production capabilities and too much in distribution. It also blamed slumping sales on consumers’ growing appetite for plant-based ice cream alternatives.

In addition to operating ice cream shops, Oberweis also sells its treats to grocery stores.

It opted for bankruptcy after trying and failing to find a buyer. But on Tuesday, it received a bid from the co-owner of Chicago-based dairy wholesaler Dutch Farms.

The trendy convenience-store chain Foxtrot and its smaller grocery sister brand Dom’s Kitchen & Market abruptly closed all 35 of their locations Tuesday ahead of a reported Chapter 7 bankruptcy filing.

It was not yet clear what went wrong for the two fast-growing brands, which merged at the end of last year to form a new entity called Outfox Hospitality. 

In a statement, the company said it “explored many avenues to continue the business but found no viable option.”

Foxtrot and Dom’s were viewed as potential restaurant competitors because they offered fresh meals and dining areas along with traditional grocery items.

The 650-unit seafood chain is considering a Chapter 11 bankruptcy filing to restructure its debt, according to Bloomberg.

Once a pillar of casual dining, Red Lobster has treaded water for years and saw sales and profits shrink in 2023. It has also fallen behind on its bills, and vendors have complained about not getting paid. 

The chain is currently being shopped around by owner Thai Union Group and last month named restructuring specialist Jonathan Tibus as its new CEO.

According to Bloomberg, restructuring talks were ongoing and a final decision had not been reached. 

The restaurant delivery company formerly known as Waitr filed for Chapter 7 bankruptcy on April 3 and ceased operations.

It had been struggling amid competition from bigger delivery companies like DoorDash and Uber Eats for years, and its revenue and corporate headcount declined sharply in 2023.

As of February, it accounted for less than 1% of all food delivery sales in the U.S., according to data from Bloomberg Second Measure.

The struggling chain’s owner, Jay Pandya, has filed for personal bankruptcy twice since December.

The first was dismissed on a technicality. The second followed a court ruling that ordered Pandya to pay $15 million to distributor US Foods over unpaid bills. 

Boston Market itself has not filed for bankruptcy, but it’s in the midst of a massive collapse. It has closed about two-thirds of its locations since 2023, many due to evictions over unpaid leases. It’s also been fined by two states for not paying employees and is under investigation by the U.S. Department of Labor.

The Chicago-based owner of the Etta Italian concept and a handful of other upscale restaurants filed for Chapter 11 bankruptcy in February.

The filing came weeks after Etta reportedly defaulted on a $2.5 million loan and abruptly closed one of its Etta locations in Chicago.

In a statement, founder David Pisor said bankruptcy would allow the group to restructure its finances, keep its restaurants open and emerge stronger. The process could include a sale.

Pisor created Etta Collective following a rift with James Lasky, his former partner in the restaurant group What If Syndicate. A 2023 settlement split What If's concepts between the two restaurateurs.

The plant-based chain out of Boston filed for Chapter 11 bankruptcy in November. 

The then-15-unit chain had ridden the plant-based wave to ambitious growth plans in 2019. But then the pandemic hit, and the sales and financing Clover was expecting never materialized. 

However, on Wednesday, the chain emerged from bankruptcy with its sights set on expansion once again. It closed two restaurants and a warehouse and installed a new management team and now plans to open 47 locations over the next five years.