The fast-food restaurant industry has struggled with financial issues since the 2020 Covid-19 pandemic leading to Chapter 11 bankruptcy filings and location closings.
Economic factors, which in some cases forced desperate measures, included the lingering effects of the pandemic, rising inflation that increased the costs of doing business, and a spike in interest rates that increased the price of financing and the cost of existing debt.
The most prominent fast-food chain to file for Chapter 11 bankruptcy in 2024 was BurgerFi International, owner and franchisor of 144 burger and pizza restaurants, which on Sept. 11 filed its petition and closed 19 locations.
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The Fort Lauderdale, Fla., company filed bankruptcy to reorganize after a turnaround plan that it implemented less than a year ago failed to produce the necessary results to prevent the filing.
The burger chain and affiliate Anthony's Coal Fired Pizza, faced a drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs, requiring the company to stabilize the business in a structured process, according to court papers.
Several large fast-food chain franchisees also filed for bankruptcy facing financial distress, including EYM Pizza, operator of 140 Pizza Hut locations in Texas, Wisconsin, and Ohio, which filed for bankruptcy on July 22, and Miracle Restaurant Group, which operated 25 Arby's restaurants in Illinois, Indiana, Texas, Mississippi, and Louisiana, filed for Chapter 11 protection on June 20.
Fast-food chains specializing in beverages have also faced financial distress that resulted in Chapter 11 filings.
Popular Arizona fast-food sandwich chain Eegee's, which is also known for its Eegee frozen fruit drinks, Eegee Fizz and Teagee tea drink, filed for Chapter 11 bankruptcy on Dec. 6 with plans for a streamlined restructuring process after closing five locations.
The Tucson, Ariz.-based restaurant chain filed its petition claiming it encountered unprecedented challenges following the Covid-19 pandemic as market conditions created economic pressure throughout the restaurant industry," its CEO Chris Westcott said.
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Kwench Juice Franchising files for Chapter 11 bankruptcy
Finally, another fast-food chain specializing in beverages has also filed for bankruptcy.
Related: Another troubled retail chain files for Chapter 11 bankruptcy
The franchisor of popular juice bar fast-food chain Kwench Juice Cafe filed for Chapter 11 bankruptcy protection under Subchapter V to reorganize its business after losing an arbitration ruling to a Detroit franchisee.
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The debtor listed up to $50,000 in assets and $500,000 to $1 million in liabilities.
Kwench Juice Franchising Inc. on Dec. 26 filed its petition in the U.S. Bankruptcy Court for the District of Massachusetts facing financial distress and liquidity issues after an arbitrator ruled in favor of franchisee Steven Droege and Kwench Juice Detroit LLC and awarded the plaintiff a $478,325 judgment.
The judgment included the rescission of the parties' franchise agreement, $400,000 in compensable damages, $60,000 in legal fees, and $18,325 in claimant costs.
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U.S. District Judge F. Kay Behm on April 17, 2024, confirmed the arbitration award in favor of Droege and Kwench Juice Detroit on claims of breach of contract, violations of the Michigan Franchise Investment Law, and violations of the Stored Communications Act.
The arbitration judgment was listed as the debtor's largest unsecured claim in its petition.
The Boston-based juice bar franchisor indicated in the petition that no funds will be available for unsecured creditors after administrative expenses are paid.
Kwench Juice Cafe has 26 locations in 12 states with one planned for Lexington, Ky. The menu features raw juices, juice cleanses, raw smoothies, acai and pitaya bowls, and juice shots.
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