Last year was a bad one for the fast-casual restaurant business, with many chains finally filing for bankruptcy after battling low profits and rising debt for years. People are simply choosing not to go out to eat as much thanks to rising prices and a perceived lack of value, even for fast food. “I think restaurants have been taking up pricing and consumers have pushed back,” Joe Pawlak, from data and analytics firm Technomic, told Restaurant Business. “We just can’t do it anymore. We’re cutting back frequency. We’re also looking at our total spend, and maybe we’re not buying that carbonated soft drink along with our meal.” These choices impact the razor-thin margins some restaurants operate under, leading to decline and in some cases, permanent closures. Here are 5 restaurant chains that recently went bankrupt after accumulating massive amounts of debt.
Red Lobster
Iconic seafood chain Red Lobster filed for Chapter 11 in May 2024 with more than $1 billion in debt and less than $30 million in cash, and emerged from bankruptcy in September 2024 after being acquired by RL Investor Holdings LLC, which is backed by Fortress Investment Group. “I’m proud of what Red Lobster has achieved during this restructuring – the Company will emerge from Chapter 11 stronger financially and operationally, and with new backers who are resolutely focused on investment and growth,” former CEO Jonathan Tibus said.
TGI Fridays
TGI Fridays filed for Chapter 11 in November 2024, citing debts of $37 million and just $5.9 million in cash. “The primary driver of our financial challenges resulted from COVID-19 and our capital structure,” Executive Chairman Rohit Manocha said at the time. “This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.” The chain has since closed down more locations but a potential buyout from the G5ive Restaurant Group could give the company a chance to recover.
Rubio’s Coastal Grill
Rubio’s filed for bankruptcy in June 2024 with over $70 million in debt, the second time the company filed Chapter 11 in four years. “The fast-casual market segment, in which the Company operates, is particularly competitive and reliant on price-sensitive customers,” Rubio’s chief restructuring officer Nicholas Rubin said in a document filed with the U.S. Bankruptcy Court for the District of Delaware, via Restaurant Dive.
Buca di Beppo
Buca di Beppo filed for Chapter 11 in August 2024, owing between $15—$50 million to creditors. “While the restaurant industry has faced significant challenges, this move is the best next step for our brand,” Buca president Rich Saultz said in a statement via CBS News. “By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future.” The chain now has 44 restaurants, down from 95 ten years ago.
BurgerFi
BurgerFi filed for bankruptcy in September 2024, with total debts of $100 million to $500 million, according to the filing. TREW Capital Management bought out BurgerFi and sister company Anthony’s Coal Fired Pizza & Wings for $44 million in October 2024. “On behalf of the entire management team, I would like to say how pleased we are with the successful auction process,” said chief restructuring officer Jeremy Rosenthal in a statement via Restaurant Business. “We are happy that the company succeeded in finding a buyer with the capital and experience to invigorate these brands and position them for success.”
Ferozan Mast
Ferozan Mast is a science, health and wellness writer with a passion for making science and research-backed information accessible to a general audience. Read more about Ferozan
