Restaurant chains and operators are slated to have their most bankruptcies in decades apart from 2020, a Wall Street Journal analysis of Chapter 11 filings found Monday.
The bankruptcies seen this year are rivaling those seen during the COVID-19 pandemic in 2020, when restrictions and other pandemic-related disruptions caused the industry’s sales to fall $240 billion, according to the WSJ. The surge in bankruptcies comes as prices have increased over 20% since President Joe Biden took office in January 2021, raising operational expenses for restaurants and making customers less inclined to eat out.
“There are a huge number of people feeling disproportionate pressure,” Justin Seamonds, CEO of Chicago fast-casual restaurant Roti, told the WSJ. “We can’t sustain the ebbs and flows.”
Roti has shuttered dozens of stores since the COVID-19 pandemic, with Seamonds telling the WSJ the decline in profitability is largely due to inflation-fatigued customers not wanting to eat out.
The list of restaurant chains declaring bankruptcy in 2024 includes Red Lobster, Hawkers Asian Street Food and Tijuana Flats. 13 restaurant companies that are either publicly traded or have $10 million in liabilities have filed for bankruptcy so far this year, up from four in 2022 and tying the total from all of 2023, according to the WSJ.
“There’s going to be pain for a while,” Morgan McClure, managing director of private equity firm Fortress Investment Group, which co-purchased Red Lobster out of bankruptcy in July, told the WSJ.
Roti and the White House did not immediately respond to requests for comment.
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