The casual restaurant sector faced financial distress in 2024 with several major chains having no choice but to file for Chapter 11 bankruptcy protection to save their businesses from closing permanently.
The most significant casual restaurant Chapter 11 bankruptcy last year was Red Lobster's filing on May 19, 2024. The restaurant chain closed more than 120 locations in its bankruptcy and now operates about 545 units.
💸💰 Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💸
TGI Friday's had nothing but problems in 2024. It started when a proposed sale to its U.K. franchisee Hostmore collapsed in September 2024.
Related: Troubled popular retailer files for Chapter 11 bankruptcy
Hostmore, which owned 87 franchises, planned to buy TGI Friday's corporate-owned units, but the two companies decided to sell all of their owned and operated restaurants to franchise operators and transition to a fully-franchised model.
TGI Friday's operated about 92 corporate-owned restaurants until Sept. 3 when it lost management control of most of its assets after its whole business securitization trustee Citibank terminated the company's management authority.
The company had about 600 franchises in 55 countries, including 213 U.S. locations in 29 states before it filed for bankruptcy, according to its website.
TGI Friday's files Chapter 11 bankruptcy to sell assets
TGI Friday's Inc. filed for Chapter 11 on Nov. 2 seeking to sell certain company assets, further reduce its restaurant footprint, and reject unfavorable leases and contracts. The restaurant chain has been selling off its corporate-owned locations in bankruptcy auctions.
TGI Friday's 122 franchised locations in the U.S. and 316 franchised units outside the U.S. did not file for bankruptcy.
Popular Italian restaurant chain Buca di Beppo filed for Chapter 11 bankruptcy protection on Aug. 4 to reorganize its business with the support of its lenders.
The restaurant on Nov. 4 won approval to sell its 44 remaining corporate-owned restaurants to its lender Main Street Capital Corp. for a credit bid of $27 million
Hooters restaurants have struggled financially in the last year as the casual dining chain closed more than 40 locations by mid-2024. In September, the company began talks with advisers and lenders about its $300 million in debt backed by revenue and assets.
The restaurant chain that features scantily clad women servers has not yet filed for bankruptcy protection.
Franchises of another restaurant chain featuring scantily clad women servers have filed for Chapter 11 bankruptcy protection but for legal reasons instead of financial distress of operations.
Image source: Shutterstock
Twin Peaks franchises file for Chapter 11 bankruptcy
DMD Ventures, owner of six record-setting Twin Peaks franchise restaurant locations in Florida, filed for Chapter 11 bankruptcy protection on Jan. 6 for affiliated entities DMD Florida Development 2 and DMD Florida Restaurant Groups C and D that own and operate two separate locations.
Related: Struggling restaurant chain sued for millions, no bankruptcy yet
The Davie, Fla.-based franchises are facing a $12 million lawsuit filed by one of its creditors, Florida Restaurant Franchise Group, a commercial real estate development and holding company affiliated with Jafrejo Holdings, according to Nation's Restaurant News.
More bankruptcy:
- Popular bankrupt restaurant chain unloads successful locations
- Formerly bankrupt burger chain rescued by fast-food rival
- Former bankrupt craft beer chain adds locations after closings
All litigation against the DMD Ventures entities is subject to an automatic stay while the bankruptcy cases proceed.
“We put two of our restaurants under Chapter 11 reorganization protection as it was the best approach to deal with a lawsuit concerning the repayment of our debt we secured over a decade ago to build the two stores," Jack Flechner, franchise owner of the group, said in a Jan. 11 statement.
"We have been in negotiations for over a year trying to work out something that both parties could agree on but were unable to. Bankruptcy protection allows us to operate business as usual.
"We will continue offering great food and drinks in a fun atmosphere, paying our vendors and suppliers as normal and work through this issue. We look forward to coming out of this in an even better position," Flechner said.
The debtors reported less than $1 million in assets and $10 million to $50 million in liabilities in their petition.
The bankruptcy filing comes as Twin Peaks reportedly plans to go public as parent company Dallas-based FAT Brands filed a Securities and Exchange Commission registration statement for a newly named Twin Hospitality Group.
DMD Ventures also operates Papa Johns franchises, Candlewood Suites hotel locations, and owns Go Mini Moving and Portable Storage, and DMD Jet Management, based out of Fort Lauderdale Executive Airport.
Related: Veteran fund manager delivers alarming S&P 500 forecast
