The parent company of over a dozen fast-food and chain restaurants just declared bankruptcy, putting the future of those businesses at risk. Fat Brands filed for Chapter 11 bankruptcy protection on Monday after years of legal and financial struggles. It joins chains like Hooters, Bar Louie, and TGI Fridays that have also gone bankrupt in recent years. Here’s what we know about the situation, including which restaurants may be affected.
Why Did the Company File for Bankruptcy?
Fat Brands has been struggling for a while now. Four years ago, CEO Andy Wiederhorn came under a three year long investigation for tax fraud and money laundering. While the U.S. Department of Justice dropped the charges, it still took a toll on the business.
Meanwhile, Fat Brands grew its portfolio of chain restaurants very quickly, acquiring at least 15 brands in less than a decade. It borrowed the money to do so based on future franchise royalties, but we all know that the restaurant industry is struggling right now as customers tighten their wallets.
Debts piled up, and then two months ago, the banks told Fat Brands that all of it was due immediately. At that point, the writing was on the wall, and it was only a matter of time before the company declared bankruptcy — with $1.45 billion in debts.
Which Restaurants Does This Affect?
Fat Brands, along with Twin Hospitality — a company Fat Brands spun off last year and is also filing for bankruptcy — have under them 17 restaurant chains across the country.
Fat Brands chains:
- Round Table Pizza
- Fatburger
- Marble Slab Creamery
- Johnny Rockets
- Hurricane Grill & Wings
- Great American Cookies
- Ponderosa & Bonanza
- Buffalo’s Cafe
- Elevation Burger
- Hot Dog on a Stick
- Twin Peaks
- Pretzelmaker
- Yalla Mediterranean
- Native Grill & Wings
- Fazoli’s
- Smokey Bones
Twin Hospitality chains:
- Twin Peaks
Will the Restaurants Be Closing?
It’s too early to tell whether any of these restaurant chains will be going out of business or closing locations. There has been no official word that either of those things is happening.
Like many businesses, Fat Brands and Twin Hospitality are using the bankruptcy process to reorganize debts and strengthen the businesses. In the bankruptcy process, Fat Brands hopes to “deleverage the balance sheet, maximize value for its stakeholders, and support continued growth of its brands,” according to a press release.
In court filings, Fat Brands indicated that operations of all the restaurant brands will continue as normal during the bankruptcy process. So for now, the restaurants will be open. This is a complicated debt situation, though, so it wouldn’t surprise us if at least some of these chains go out of business in the near future.
