Lesser-Known Restaurants File Bankruptcy as Competition Heats Up - ABI

Restaurant chains including McDonald’s, Olive Garden and Popeyes are battling to get customers through the door as more Americans choose to eat at home. Meanwhile, a growing number of lesser-known brands that can’t attract new diners are facing bankruptcy and restructuring, Bloomberg News reported. American Blue Ribbon Holdings LLC, the owner of Village Inn and Bakers Square, and Bar Louie Restaurants, a chain of gastropubs, both filed for bankruptcy on Monday. Each cited declining foot traffic in the U.S. as reason for the need to seek chapter 11 protection. “The business is just over-built, especially casual dining and full-service dining,” said Michael Halen a senior restaurant analyst at Bloomberg Intelligence. “There are too many restaurants.” In addition to declining store traffic, American Blue Ribbon attributed its restructuring to increased competition, rising labor costs and a growing number of unprofitable restaurant locations, Chief Financial Officer Kurt Schnaubelt said in court papers. The Denver-based company currently owns and operates 97 restaurants. It closed 33 stores prior to the filing. Bar Louie, based in Addison, Texas, said that opening new locations over the last few years helped increase sales, but the growth was funded by debt that has restricted the company’s liquidity, according to a declaration from Chief Restructuring Officer Howard Meitiner. Without sufficient cash to fund store refreshes and equipment maintenance, the brand experience was inconsistent across locations, Meitiner said. ABI

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