Rising costs, particularly rising rents and labor, have brought several restaurant chains to the brink of closure.
If we add to this that many chains have taken on additional debt due to the losses they suffered during the Covid pandemic, we have a situation that has forced many chains to go bankrupt.
Additionally, cash-strapped consumers are demanding lower prices, which big chains have provided. When McDonald's admits that consumers want more value and offers a five-dollar meal, the competition has a hard time matching it.
Related: Another coffee, coffee shop and bakery chain files for Chapter 11 bankruptcy
Even chains like Chipotle, which has typically said it can raise prices and people will still pay, have faced backlash. Videos on social media claim the chain has been offering smaller portions at higher prices; The company has said it raised prices but denied cutting portions. And those video efforts haven't worked: The chain's first-quarter sales grew 14.1% and same-store sales rose 7%.
Still, even as Chipotle bucks the trend, consumers have been pushing for value and that's much harder for smaller chains to offer. McDonald's, Chipotle, Wendy's and other massive chains could see their profits hit due to rising labor costs, but they have enormous purchasing power and can pull multiple levers to control spending.
Smaller chains can't do that and financial problems have pushed a smaller fast food/fast casual chain to the brink.
Image source: Cate Gillon/Getty Images
Melt Bar and Grilled has a bold mission
It is difficult to classify Melt Bar and Grilled. The chain has been built around grilled cheese, a classic comfort food that could be considered fast food, and craft beer, which is not traditionally sold in fast food restaurants.
On its website, the chain itself admits that it is difficult to define.
“It's an energetic and eclectic gourmet comfort food restaurant. It's a relaxing neighborhood craft beer bar. It's a genuinely all-inclusive gathering place that welcomes everyone: tattoos and suits, moms and rockers, locals and visitors. It's a melting pot and a meeting place for everyone,” the company published.
The chain was created by Matt Fish, a Cleveland musician and chef who loves craft beer and grilled cheese sandwiches.
“Matt's vision was to bring classic American dishes to the table in a fun, unpretentious way because everyone can relate to a grilled cheese sandwich,” the chain said. “The answer to 'What is Melt?' It's not just the bread, the cheese, the craft beer, the music and the atmosphere, it's the chemistry of it all (the way it comes together) that makes Melt unique. It's a certain magic that can't be explained. easily, you have to experience it.”
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That's a bold vision, but it didn't stop the chain from filing for Chapter 11 bankruptcy on June 14. The company hopes to reorganize its finances to survive and recently won a small court victory that will keep it open for now.
Melt Bar and Grilled Scores Small Victory in Bankruptcy
“Navigating the restaurant industry in the post-pandemic world with growing economic problems is becoming increasingly difficult,” founder Fish said in a statement. “The world and the industry are changing rapidly around us. “After careful consideration, Melt Bar and Grilled has decided to file for Chapter 11 bankruptcy. This gives us the best opportunity to reorganize and rebuild the business.”
At the time of its filing, in the U.S. Bankruptcy Court for the Northern District of Ohio, Melt Bar and Grilled disclosed that it had assets between $500,001 and $1 million with liabilities between $1 million and $10 million.
It operated four main restaurants in Cleveland and satellite establishments in Cleveland and Columbus. Founded in 2006, it once had up to 14 locations.
More bankruptcies:
- Popular bakery chain unexpectedly files for Chapter 11 bankruptcy
- Distressed housing brand files for Chapter 7 bankruptcy and will liquidate
- Popular Restaurant Chain Shares Bad News About Chapter 11 Bankruptcy
Judge Alan M. Koschik, who is overseeing the bankruptcy, “granted an emergency order in the case on June 21, which will allow the chain to pay $100,000 in “employee salaries, wages and benefits” through a bank account. KeyBank payroll, as well as reimburse employees' business expenses from the pay period through June 14.
But the order also prevents Melt from paying “severance, vacation or bonuses” without further action by the judge. NBC 4 Ohio reported.
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The order allows the chain to continue operating while it negotiates with its creditors.
Koschik scheduled a status conference on the bankruptcy case for Aug. 6. He gave all of Melt's creditors, excluding government agencies, a deadline of August 27 to file claims on Melt's assets, according to the news website.
