Restaurant chains have faced financial distress this year related to several factors, such as rising food prices caused by inflation, increased interest rates, and changes in consumer spending habits.
The harsh economic impact on restaurants has led several to close locations and sometimes file for bankruptcy.
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Related: Bankrupt pizza chain operator unloads dozens of restaurants
Struggling Pizza Hut operator EYM Pizza, which operates franchise locations in Illinois, Indiana, Ohio, Texas, and Wisconsin, filed its Chapter 11 petition in the U.S. Bankruptcy Court for the Eastern District of Texas on July 22 and hired brokerage National Franchise Sales to sell its 127 restaurants through its bankruptcy case.
The Irving, Texas-based pizza franchisee had been sued by Yum Brands' (YUM) Pizza Hut after it stopped paying royalties when a forbearance period with its parent company ended.
Popular Sonoma, Calif.-based chain Mary's Pizza Shack on Sept. 10 filed for Chapter 7 protection in the U.S. Bankruptcy Court for the Northern District of California as part of a restructuring that will convert the business from a single corporation into smaller family-owned units.
Mary's Pizza Shack began its corporate restructuring in fall 2022, which resulted in the company closing five restaurant locations, though it would reopen one location after eight months and continue operating 10 Northern California units.
BurgerFi International (BFI) , owner and franchisor of 144 burger and pizza restaurants nationwide, on Sept. 11 filed for Chapter 11 bankruptcy protection to reorganize after a turnaround plan that it implemented less than a year ago failed to produce necessary results to prevent the filing.
Related: Struggling retailer closes more stores in Chapter 11 bankruptcy
The Fort Lauderdale, Fla., chain closed 19 underperforming corporate-owned locations and reduced related operating costs as part of its turnaround plan.
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Dickey's closes 85 locations in fiscal 2024
Finally, fast-casual chain Dickey's Barbecue Restaurants has been closing locations nationwide since it peaked at 562 franchise units in 2017, closing a net of 205 locations since the beginning of fiscal year 2018. The company, however, has not filed bankruptcy and has not indicated that it has any such plans.
Except for 2021, when the company reported nine net openings to bring its franchise total up from 463 to 472 units, the company's franchise net total has plummeted each year, according to its Franchise Disclosure Document reported by QSR.
Dickey's in its fiscal year ending May 31, 2024, reported the steepest decline in franchise restaurant units since its peak with 85 net closures falling from 442 in 2023 to 357 in 2024. The company opened 12 franchised restaurants but also closed down 97.
More restaurant stories:
- Popular Asian restaurant chain files for Chapter 11 bankruptcy
- Popular fast-food chain owner files for Chapter 11 bankruptcy
- Popular pizza chain files for Chapter 7 bankruptcy
The company's franchise total had also fallen by 23 units from 465 in 2022 to 442 in 2023.
In addition to its 357 franchise locations, Dickey's has nine corporate-owned locations in Texas and Oklahoma, plus 19 international units for a total of 385 restaurants.
The company had 19 franchise agreements signed but not opened as of May 31. It reportedly expects to open four franchises in 2025.
Dickey's franchise operators have had some financial difficulties as Smokin' Dutchman Holdings, which operates four Michigan Dickey's restaurants, filed for Chapter 11 protection on Sept. 9 to restructure its business, blaming its financial difficulties on Dickey's for allegedly imposing extreme and unreasonable demands on the debtor's resources.
Founded in 1941, the Dallas-based barbecue restaurant chain's menu features slow-smoked beef brisket, pulled pork, St. Louis-style ribs, polish sausage, spicy cheddar sausage, smoked turkey, and marinated chicken. Its home-style sides include baked beans, loaded baked potato casserole, fried okra, green beans with bacon, fries, mac and cheese, coleslaw, and potato salad.
It also offers brisket, pulled pork, turkey, chicken breast, sausage, and smoked meat and cheese sandwiches.
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