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It’s been a bumpy road for many fast food and fast casual operators lately.
Take Red Lobster’s ongoing failure, for example.
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The seafood restaurant, which operates about 700 restaurant locations across the country, is no stranger to running deals to attract customers. Its famous cheddar biscuits boast a cult following, and the restaurant regularly sells some sort of limited-time deal on seafood or appetizers in an effort to boost traffic and excitement.
However, in 2023, Red Lobster may be a little too happy with the promotion, offering an unlimited shrimp deal, resulting in something of a scramble and eventual collapse of the entire restaurant.
The now-popular Ultimate Endless Shrimp offer allowed guests to order a variety of unlimited shrimp dishes, such as Garlic Shrimp Scampi or Shrimp Linguini Alfredo, for just $20. After the restaurant saw unprecedented demand, it raised the price to $22, and later to $25.
But the damage has been irreversibly done, resulting in an operating loss of about $11 million for the third quarter of 2023.
“We knew the price was cheap, but the idea was to bring more traffic to restaurants,” Ludovic Régis-Henri Garnier, CFO of the Thai Federation, said in the third quarter. Earnings call. “So we wanted to boost our traffic, and it didn’t work out.”
The restaurant filed for Chapter 11 bankruptcy in Florida and has since closed 100 locations.
Restaurants were struggling
Red Lobster isn’t the only restaurant to have struggled over the past two years.
Foxtrot and Dom’s Kitchen, popular upscale grocery stores in cities like Chicago and Washington, D.C., have faced similar challenges over the past year. The company closed its doors permanently — and abruptly — earlier this spring, claiming that staying open had reached an untenable point.
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“It is with a heavy heart that we must inform you of the difficult decision we have had to make,” the company wrote on April 23, adding that “this decision was not made lightly.”
“We understand that this news may come as a shock, and we apologize for any inconvenience this may cause. We truly appreciate your understanding during this difficult time,” the company wrote.
Other chains, including Tijuana Flats, Rubio’s Coastal Grill, Sticky Fingers and Ink Coffee, have filed for Chapter 11 bankruptcy in recent months after struggling to stay afloat.
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Big sandwich franchise owner files for bankruptcy
Now, River Sub, a franchisee that operates just under 50 Subway locations, has filed for Chapter 11 bankruptcy protection after finding itself embroiled in legal troubles.
The San Antonio, Texas-based company has lost an ongoing legal battle in a wrongful death suit involving a former store manager, Marisela Cadena, who was shot to death at a Subway store in 2020 by her ex-boyfriend. River Sub was ordered to pay $2.97 million for refusing to allow Cadena to move stores or provide adequate safety and protection measures for it against a known threat.
The lawsuit, combined with the difficulties presented by the Covid pandemic for the fast food operator, proved to be a significant financial burden and the franchisee filed for Chapter 11 on June 20 In Texas.
At its peak, River Sub operated 69 locations in 2012, but has seen its finances deteriorate rapidly in recent years. It blamed Covid for an 80% drop in sales, putting total sales at about $30 million in 2023. It did not give a specific reason for filing for Chapter 11, and currently employs about 454 people.
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