The restaurant business is competitive and challenging, with about 49% of establishments failing within five years of operation, according to Owner.com's data from the U.S. Bureau of Labor Statistics. Things don't get better over time, as restaurants have a 10-year survival rate of less than 35%.
The most notable recent restaurant bankruptcy filing has been Red Lobster, which filed for Chapter 11 bankruptcy on May 19. The restaurant chain immediately closed 93 underperforming locations and another 100 locations could close if it can't reach a deal with its landlords.
Related: Another key healthcare chain files Chapter 11 bankruptcy
The company, in a June court filing, showed that 228 total restaurants cannot make money with their current lease situations. Including the 93 Red Lobster locations already closed, the company could close an additional 135 restaurants.
A smaller restaurant chain, Melt Bar & Grilled, which at one time had 14 locations in Ohio, on June 14 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of Ohio. The company had suffered financial difficulties from increased food and labor costs caused by inflation and faced lawsuits filed by landlords.
Melt Bar & Grilled specializes in gourmet grilled cheese sandwiches, craft beers and signature drinks. The restaurant also features a vegan menu with vegan grilled cheese, vegan mac and cheese, tofu wings, and other items.
Related: Struggling food chain shares mixed Chapter 11 bankruptcy news
Financial distress is often the top reason many restaurants file for bankruptcy, but sometimes, other unfortunate circumstances can drive a restaurant owner to file for bankruptcy.
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Gotham Restaurants files Chapter 11 bankruptcy
Popular New York establishment Gotham Restaurants, which has operated in Greenwich Village for about 40 years, on July 24 filed for Chapter 11 protection and shut down two months after losing $45,000 in a cyberscam, New York Post reported.
The debtor listed up to $50,000 in assets and $1 million to $10 million in liabilities in its petition. Its largest unsecured claims include the New York Department of Taxation and Finance, owed $483,893; vendor Dairyland, owed $98,871; Chase Cardmember Service, owed $77,765; Consolidated Edison of New York, owed $55,524 and vendor Baldor Specialty Foods, owed $47,828.
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99 Bottles Hospitality of Melbourne, Fla., which operates the popular high-end steakhouse Ember & Oak, filed for Chapter 11 bankruptcy protection on July 17 in the U.S. Bankruptcy Court for the Middle District of Florida.
99 Bottles Hospitality listed up to $50,000 in assets and $1 million to $10 million in liabilities in its petition.
The company listed $1.04 million in income and over $684,000 in losses in 2023. It had about $2.28 million in assets and $3.3 million in liabilities at the end of 2023, according to court papers.
The company said on its Ember & Oak website that it is not closing down and will continue operating through its bankruptcy process. The company is looking to sign a lease for a new location.
Correction:
A previous article in TheStreet inadvertently identified Sarasota, Fla.-based 99 Bottles Taproom & Bottle Shop as filing for Chapter 11 bankruptcy, which was not the case. 99 Bottles Taproom & Bottle Shop has not filed a Chapter 11 bankruptcy petition and is not reorganizing.
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