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Writer's pictureAmi Kassar

AmiSight 11/1: Restaurants Feeling the Aftershock: A Surge in Bankruptcy Filings

Whether sit-down or casual, many restaurants have a common trend in 2024: Bankruptcy. 


The Wall Street Journal reports that restaurant chains and operators are on pace this year to declare the most bankruptcies in decades outside of 2020, when the COVID-19 pandemic halted the industry.


Although the restaurant sector has bounced back since the pandemic caused shutdowns five years ago, inflation has caused some customers to pull back from dining out. Same-store sales traffic at U.S. restaurants was down by 3.3% this year through Oct. 6 versus the same period in 2023, and visits to casual dining restaurants fell 4.5%.


On top of that, COVID relief funds and concessions from landlords have dried up, and high interest rates have hurt companies that gave priority to growth over profit.


As banks become more cautious of the restaurant industry and fewer private equity firms are willing to take on the risky businesses, some chains will likely shrink or scale back the number of markets they serve. Investors who have bought chains out of bankruptcy are hoping to turn the brands around by cutting costs, closing locations, and boosting efficiency.



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