Before coronavirus took hold of the country, restaurant chains were filing for Chapter 11 bankruptcy protection because of normal fluctuations in the industry – but then the pandemic hit. COVID-19 has only increased the speed at which brands are facing financial peril, with eight chains going bankrupt in the past two months alone. For context, NRN reported on nine bankruptcies in all of 2019.
Krystal, Bar Louie, Village Inn and Cosi all filed for Chapter 11 bankruptcy protection before the coronavirus pandemic took hold across the U.S. in March.
Cosi filed in February with the intention of transitioning to a catering comapny, rather than a restaurant company. Coronavirus practically eliminated the need for catering businesses, as large gatherings have been off-limits for several months.
In mid-March, the coronavirus-related shutdowns started piling on.
Garden Fresh Restaurants, TooJay’s parent TooJay’s Management LLC, and Sustainable Restaurant Holdings all cited the pandemic and related closures in company statements or interviews about their bankruptcies, with Toojay’s explicitly citing coronavirus in its bankruptcy filing with the SEC.
As recently as two weeks ago, NPC International, a large franchisee of Wendy’s and Pizza Hut (the latter of which has performed well at corporate locations and under its parent company, Yum Brands) filed for Chapter 11. The franchisee had been struggling before the pandemic.
There is some hope for these brands. Two of them, Krystal and Le Pain Quotidien, have either been bought or sold units to live on, financed by other companies.
Other brands, such as Luby’s, haven’t declared bankruptcy or filed for bankruptcy protection (they’re not listed in this slideshow for that reason) but they have utilized other financial options such as putting their assets and operating divisions up for sale.
Midway through the year that no one could have predicted, we’ve seen 14 large chains or restaurant groups file for bankruptcy. See who they are here.
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