The fast-casual restaurant segment continues to grapple with challenges in the wake of the Covid-19 pandemic, which forced widespread shutdowns across the country. While many establishments adapted to delivery, takeout, and drive-thru models, the financial repercussions of closing dining rooms have led numerous chains to file for Chapter 11 bankruptcy protection or, in some cases, Chapter 7 liquidation.
Notable Bankruptcy Filings in the Industry
The repercussions of the pandemic have been profound, and some chains are only now feeling the impact. Red Lobster stands out as a significant player, submitting its Chapter 11 petition on May 19 and permanently closing 93 restaurants as part of its restructuring efforts.
In another case, Rubio’s Coastal Grill claimed that California’s AB 1228, which raised the minimum wage for fast-food workers at chains with over 60 locations from $16 to $20 per hour, contributed to its financial woes. On June 5, the Mexican fast-casual chain filed for Chapter 11 bankruptcy, shuttering 48 locations across California. Before its bankruptcy filing, Rubio’s operated a total of 134 locations in California, Arizona, and Nevada.
The Italian restaurant segment has not been immune to financial distress. In April 2020, FoodFirst Global, the parent company of Brio Tuscan Grill and Bravo Cucina Italiana, filed for Chapter 11 bankruptcy as the pandemic exacerbated pre-existing struggles. Two months later, Earl Enterprises acquired the Italian restaurants out of bankruptcy.
Johnny Carino’s, another Italian chain owned by Fired Up, has a troubled history, having filed for Chapter 11 protection twice—first in 2014 and again in 2016.
Buca di Beppo Files for Chapter 11
In a recent development, the popular Italian restaurant chain Buca di Beppo filed for Chapter 11 bankruptcy protection on August 4, aiming to reorganize with the support of its lenders. The Orlando-based chain, along with its largest equity holder, Buca Investments, and nine affiliates, submitted their petitions in the U.S. Bankruptcy Court for the Northern District of Texas, reporting liabilities ranging from $10 million to $50 million. The debtors have requested joint administration of their cases.
Court documents reveal that Buca di Beppo’s operations have faced significant challenges, including a notable drop in sales, rising food and labor costs, staffing difficulties, and shifts in consumer preferences. The chain recently closed 13 underperforming locations, including restaurants in Sacramento and Salt Lake City. Currently, Buca di Beppo operates 44 core locations across 14 states, as well as two international locations and a new location in the pipeline.
In a statement, company president Rich Saultz expressed optimism, stating, “This is a strategic step towards a strong future for Buca di Beppo. While the restaurant industry has faced significant challenges, this move is the best next step for our brand. By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future.”
Buca di Beppo, which started in Minneapolis in 1993, once boasted as many as 95 locations by 2013 before beginning to close restaurants. The chain was purchased by Robert Earl’s Planet Hollywood International in 2008 and is currently under the ownership of Earl Enterprises.
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