June
17, 2021
5 min read
This story originally appeared on ValueWalk
We all know that 2020 was a brutal year that devastated many big name companies, especially in the restaurant industry. Last year, a report from the National Restaurant Association claimed that about 17% of the country’s restaurants, or about 110,000, permanently closed in 2020, with thousands more on the brink of closing. This number includes not only individual restaurants but several chain restaurants as well. Many of these chain restaurants were already facing financial challenges before, but the pandemic made things worse. Let’s take a look at the 10 biggest restaurant chain bankruptcies in 2020.
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10 Biggest Restaurant Chain Bankruptcies In 2020
We have used several factors, such as debt size, assets, popularity and more, to rank the 10 biggest restaurant chain bankruptcies in 2020. These are the 10 biggest restaurant chain bankruptcies in 2020:
California Pizza Kitchen
This 35-year-old pizza chain filed for Chapter 11 bankruptcy protection in July last year. CPK blames the coronavirus pandemic, especially restrictions on indoor dining, for the bankruptcy. The company exited bankruptcy in mid-November, and used the process to lower its debt and close many unprofitable locations. CPK lowered its debt load by over $220 million, and is now focusing on expanding its global franchise footprint.
TooJay’s
TooJay’s filed for Chapter 11 bankruptcy protection in April last year. This deli chain based in South Florida blamed the coronavirus pandemic for bankruptcy. In its filing, the company said it was operating profitably before the COVID-19 outbreak. TooJay’s filed for bankruptcy despite securing $6.4 million under the Paycheck Protection Program (PPP). At the time of bankruptcy filing, the restaurant chain had $33 million in secured debt (from ten lenders).
Sizzler USA
Sizzler, which is one of the country’s first casual restaurant chains, filed for Chapter 11 bankruptcy protection in September last year. The 62-year-old company filed for bankruptcy after the pandemic forced it to temporarily close its restaurants’ dining rooms. It got between $2 million and $5 million in federal aid from the PPP (Paycheck Protection Program). As per the company, it is using the bankruptcy process to lower its debt, as well as renegotiate its leases.
Il Mulino
K.G. IM, the parent company of the Il Mulino restaurant chain, filed for Chapter 11 bankruptcy protection in July last year. K.G. IM, which has 16 locations, filed for bankruptcy on behalf of its seven locations in Miami, Puerto Rico, Las Vegas, Long Island, and Atlantic City. Even though the company received about $2.3 million from the Paycheck Protection Program (PPP), the restaurant claims it had to file bankruptcy to thwart the takeover attempt by one lender, BSP Agency.
Ruby Tuesday
This casual dining chain filed for Chapter 11 bankruptcy protection in October last year. Ruby Tuesday, which blames the pandemic for its bankruptcy, says it would use the protection to reduce its debt and operate as normally as possible. This privately held restaurant chain permanently closed about 185 locations. Ruby Tuesday emerged from federal bankruptcy protection earlier this year, with less debt and fewer restaurants.
NPC International
NPC International filed for bankruptcy protection in July last year. This name may not appear familiar to many, but it is one of the most successful franchise operators. NPC International had over 1,600 restaurant franchises, including Wendy’s and Pizza Hut. The company had been struggling even before the pandemic, and had a debt load of nearly $1 billion. Along with the debt and pandemic, rising labor and food costs contributed to its bankruptcy.
FoodFirst Restaurants
The parent company of Brio Tuscan Grille and Bravo Cucina Italiana, filed for Chapter 11 bankruptcy protection in April last year. The casual dining company said it had been struggling even before the coronavirus outbreak due to several reasons, including rising food costs, labor pressure and the drag of unprofitable locations. FoodFirst even got a new CEO in January of last year.
Krystal Holdings
This 88-year-old fast food chain filed for bankruptcy in January 2020. Though this restaurant chain went bankrupt even before the pandemic gripped the U.S., we have included this in our list as it was from last year. Krystal blamed several factors that lead to its bankruptcy, including rising competition, rise of online delivery platforms and shifting consumer tastes. This restaurant chain emerged from bankruptcy in May.
Friendly’s
This East Coast diner chain filed for Chapter 11 bankruptcy protection in the late fall of 2020. It was Friendly’s second bankruptcy in less than a decade. At the time of bankruptcy filing, this 85-year-old restaurant chain said they plan to keep most of their 130 locations open. The company operated 400 locations about a decade ago. FIC Restaurants is the parent company of Friendly’s.
Chuck E. Cheese
CEC Entertainment, the parent company of Chuck E. Cheese restaurants, filed for Chapter 11 bankruptcy protection in June last year. CEC had a debt load of over a billion dollars before the pandemic forced the shutdown of all its locations. This 43-year-old company filed for bankruptcy protection to “achieve a comprehensive balance sheet restructuring that supports its re-opening and longer-term strategic plans.”