August 17, 2020
By: Caity Roach (née Witucki)
Contributing Editor, Main Street Monday
Main Street Monday – Restaurant Industry Bankruptcies
According to the Journal of Hospitality Financial Management (JHFM), the foodservice industry continues to experience significant setbacks due to event cancellations and consumer trends caused by the coronavirus pandemic. Already, numerous restaurants have had to file bankruptcy as a result, including several parent companies of larger chains.
Here are the top restaurant bankruptcies from this year:
- CEC Entertainment, Chuck E. Cheese’s parent company, filed for Chapter 11 bankruptcy on June 25, 2020 when same-store sales fell 21.9%.
- Garden Fresh Restaurants, The parent company of buffet-style restaurants Souplantation and Sweet Tomatoes filed for Chapter 7 bankruptcy in May and closed all of their locations permanently. The following month, the company liquidated its assets.
- Le Pain Quotidien, an international chain of bakery-restaurants, was already preparing for bankruptcy when the pandemic started. Recent restaurant closures due to the ongoing pandemic nearly forced the company to liquidate its assets. However, New York-based restaurant operator, Aurify Brands, bought all 98 U.S. locations of the restaurant and now plans to reopen at least 35.
- FoodFirst Global Restaurants, the parent company of Brio and Bravo restaurants, filed for Chapter 11 bankruptcy in April and permanently shuttered 48 out of nearly 100 locations. In June, Earl Enterprises bought the two Italian restaurant chains and plans to assume the leases of at least 45 locations.
Despite the growing number of restaurant industry bankruptcies, some restaurants are continuing to make ends meet and a few are performing better during the pandemic. The fast-casual restaurant market (including restaurants like McDonald’s, Subway, Starbucks, Wendy’s, Burger King, Taco Bell, Dunkin’ Donuts, Pizza Hut, KFC, and Hardee’s) is performing the best.
Experts expect other types of restaurants to experience more rapid recovery in the third quarter. However, buffets are expected to continue to see poor performance.