Restaurant Bankruptcies Reportedly at Highest Level Since Pandemic

Chain restaurant bankruptcies are reportedly at their highest level since the pandemic.

Among the most recent examples is the casual dining franchise TGI Friday’s, one of more than a dozen high-profile eateries to seek bankruptcy protection between January and October of this year, Bloomberg News reported Thursday (Dec. 5), citing BankruptcyData.

According to the report, that’s the most through that date since 2020, and next year could bring more turmoil, with restaurant prices jumping due to increased labor costs, supply chain issues and steeper interest expenses, lessening consumer demand for meals away from home.

Bloomberg cited data from Black Box Intelligence showing that restaurant prices rose 44% between 2015 and March of this year, compared to a 26% uptick in grocery prices during the same timeframe.

“It’s really hard for somebody to go to a restaurant at the same pace as we did before,” Victor Fernandez, vice president of insights at Black Box Intelligence, said. “That’s putting a lot of pressure on brands.”

In addition to TGI Friday’s, the Italian chain Buca di Beppo, fish taco restaurant Rubio’s Coastal Grill, owner of burger and pizza chains BurgerFi and Anthony’s Coal Fired Pizza, and Red Lobster are all among companies seeking reorganization via bankruptcy in a year that has not been easy on the dining industry.

“I don’t know about you guys, but I’m ready for ‘24 to be behind us, and I think ‘25 is going to be a great year,” Kate Jaspon, chief financial officer of Dunkin’ parent company Inspire Brands, said at an industry conference in Las Vegas last month.

Her comments were reported by CNBC, which included its own statistic from Black Box Intelligence: Restaurant traffic for eateries open at least a year had fallen year over year in each month through September.

Meanwhile, high-profile chains such as McDonald’s and Starbucks have reported declines in quarterly sales, disappointing their investors.

And while global names like these are seeing sales fall, smaller restaurants are dealing with challenges of their own, like scaring up capital, Mitchell Hipp, divisional vice president at Rewards Network, said in an interview with PYMNTS posted earlier this week.

“Most restaurants are undercapitalized to begin with, and it’s the No. 1 business that fails in the U.S.,” he said.

Most small-to-mid-sized restaurants only have enough funding to remain open for six months, though they should — ideally — have the capital to keep running for a few years.

“Six months goes by quickly when you open up a smaller restaurant. Unless people are flocking through the doors, it almost immediately becomes a situation where [owners] are chasing their tails from day one,” Hipp said.