Bankruptcy Alert: Fried Chicken Chain Files Chapter 11 Amid Financial Struggles
The restaurant industry continues to grapple with the aftermath of the Covid-19 pandemic, with many fast-food and fast-casual chains facing financial turmoil due to reduced foot traffic, soaring food prices, and rising interest rates.
Tijuana Flats Seeks Reorganization
On April 19, fast-casual Tex-Mex chain Tijuana Flats Restaurants filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida. This move followed a strategic review launched in November 2023 aimed at revitalizing the struggling chain. As part of the reorganization process, the company has been sold to a new ownership group, closed 11 locations, and is focusing on enhancing the customer experience.
Foxtrot and Dom’s Kitchen & Market Liquidate
In contrast, another restaurant chain, Foxtrot and Dom’s Kitchen & Market, which operates 33 locations across the U.S., has opted for Chapter 7 liquidation. This decision, made on April 23, comes after the company failed to recover from financial distress that began during the pandemic.
Sticky’s Pursues Chapter 11 Reorganization
Sticky’s Holdings, the parent company of the New York-based chicken finger fast-food chain Sticky’s, filed for Chapter 11 bankruptcy on April 25 to reorganize its operations. The company has faced significant financial challenges stemming from decreased traffic due to the pandemic, rising commodity prices, and ongoing legal issues.
In its bankruptcy petition, Sticky’s reported $5.75 million in assets and $4.67 million in liabilities, with its largest unsecured creditor being US Foods, owed over $449,000. Since its founding in 2012, Sticky’s experienced substantial growth, with sales jumping from approximately $500,000 in 2013 to $22 million in 2023. However, the pandemic drastically impacted store traffic, and revenue has not returned to pre-pandemic levels, according to a declaration from Sticky’s CEO, Jamie Greer.
Rising inflation has driven up commodity prices, forcing Sticky’s to increase menu prices, which in turn has further stifled customer traffic. In early 2021, the company made efforts to reduce costs by exiting its corporate office on East 33rd Street in New York prior to the lease expiration.
Legal Challenges Add to Financial Burdens
Sticky’s has also faced legal troubles, including a lawsuit filed by Sticky Fingers Restaurants LLC on June 30, 2022, in the U.S. District Court for the Southern District of New York, alleging trademark infringement. The expenses related to this ongoing litigation have exacerbated the company’s financial struggles.
In a bid to alleviate its financial burdens, Sticky’s entered into an equity financing transaction on February 23, 2024, converting $2.42 million in convertible notes due March 31, 2024. This move has significantly reduced the company’s short-term liquidity needs. However, ongoing financial challenges have ultimately led Sticky’s to file for bankruptcy to pursue reorganization.
Sticky’s specializes in chicken fingers and sandwiches made from fresh, never-frozen, and antibiotic-free chicken, offering a selection of 18 in-house sauces for its menu items. Currently, the chain operates 12 locations—nine in New York and three in New Jersey—but has closed two locations in New York and one each in New Jersey and Pennsylvania. While Sticky’s had planned to establish a franchise entity for expansion, no franchise operations have launched to date.
