The restaurant business is competitive and challenging, with approximately 49% of establishments failing within five years of opening, according to Owner.com data from the U.S. Bureau of Labor Statistics. Things don’t get better with time, with restaurants having a 10-year survival rate of less than 35%.
The most recent restaurant filings have been Red Lobster, which filed for Chapter 11 bankruptcy on May 19. The restaurant chain immediately closed 93 underperforming locations, and another 100 locations could close if it cannot reach an agreement with its landlords.
Related: Another major healthcare chain files for Chapter 11 bankruptcy
The company, in a court filing in June, showed that 228 restaurants in total cannot make money under their current leasing situations. If the 93 Red Lobster locations that have already closed are included, the company could close another 135 restaurants.
On June 14, a smaller restaurant chain, Melt Bar & Grilled, which once had 14 locations in Ohio, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of Ohio. The company had been struggling financially due to rising food and labor costs caused by inflation and was facing lawsuits from landlords.
Melt Bar & Grilled specializes in gourmet grilled cheese sandwiches, craft beers, and signature drinks. The restaurant also offers a vegan menu featuring vegan grilled cheese, vegan mac and cheese, tofu wings, and other dishes.
Related: Struggling food chain's stock shows mixed results Chapter 11 bankruptcy news
Financial problems are often the main reason why many restaurants file for bankruptcy, but sometimes other unfortunate circumstances can lead a restaurant owner to file for bankruptcy.
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Gotham Restaurants files for Chapter 11 bankruptcy
Popular New York establishment Gotham Restaurants, which has been operating in Greenwich Village for about 40 years, filed for Chapter 11 protection on July 24 and closed two months after losing $45,000 in an online scam, the New York Post reported.
The debtor listed in his petition up to $50,000 in assets and between $1 million and $10 million in liabilities. His largest unsecured claims include the New York Department of Taxation and Finance, owed $483,893; supplier Dairyland, owed $98,871; Chase Cardmember Service, owed $77,765; Consolidated Edison of New York, owed $55,524; and supplier Baldor Specialty Foods, owed $47,828.
More bankruptcies:
- Pizza chain in crisis plans to file for Chapter 11 bankruptcy
- NASCAR team's woes worsen after Chapter 11 bankruptcy
- Struggling grocery brand files for Chapter 11 bankruptcy
99 Bottles Hospitality of Melbourne, Florida, which operates the popular high-end steakhouse Ember & Oak, filed for Chapter 11 bankruptcy protection on July 17 in the U.S. Bankruptcy Court for the Middle District of Florida.
99 Bottles Hospitality listed up to $50,000 in assets and between $1 million and $10 million in liabilities in its petition.
The company reported $1.04 million in revenue and more than $684,000 in losses in 2023. It had about $2.28 million in assets and $3.3 million in liabilities at the end of 2023, according to court documents.
The company said on its website that Ember & Oak will not close and will continue to operate during the bankruptcy process. The company is looking to sign a lease for a new location.
Correction:
An earlier article on TheStreet inadvertently identified Sarasota, Florida-based 99 Bottles Taproom & Bottle shop as a company that had filed for Chapter 11 bankruptcy, which was not the case. 99 Bottles Taproom & Bottle shop has not filed for Chapter 11 bankruptcy and is not reorganizing.
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