According to a 2020 Harvard Business School study, corporate bankruptcy filings increased significantly in the early months of the pandemic. Between Jan. 1 and Aug. 31, filings with assets worth $50 million or more skyrocketed nearly 200% on an annualized basis.
While these numbers don’t sound surprising, it’s worth noting that small business signups haven’t grown at the same rate. In fact, small business bankruptcies actually declined in the early months of the pandemic.
The Harvard study acknowledges the “very different role” bankruptcy plays for large corporations versus individual consumers and small businesses. While corporations are adept at using bankruptcy as a source of debt protection, smaller companies are more likely to refrain from filing and view bankruptcy as a “last resort.”
Given that difference in approach and attitude, here’s a look at four restaurant chains making the biggest comebacks after bankruptcy.
And don’t miss out on these popular restaurant chains planning to keep prices competitive, CEO says.
California Pizza Kitchen has been hit hard by the pandemic: Sales at the restaurant fell 77% in the last week of March 2020, and by the end of the year the chain had lost more than a tenth of its store count. When CPK filed for bankruptcy in July 2020, it was $403 million in debt.
However, not long after the filing, a debt-for-equity deal was struck that reduced the overall debt burden by $220 million. With its finances in better shape — and a major menu upgrade — the chain’s business has rebounded over the past two years. In 2021, annual sales grew back to $490 million. CPK will be expanding in the near future, with plans for overseas development and the launch of a new domestic franchising program.
The steakhouse chain’s parent company, CraftWorks Holdings, filed for bankruptcy in March 2020, furloughing nearly all of its 18,000 employees.
Not long after, however, Nashville-based restaurant group SPB Hospitality acquired the CraftWorks portfolio for $93 million.
Logan’s Roadhouse has fared well under new leadership so far: SPB has reduced Logan’s footprint to a meager 146 restaurants and has been successful in restoring sales. After a nearly 50% drop in 2020, annual sales rebounded to $417 million in 2021.
Buffet chains have been particularly hard hit by the pandemic, and Golden Corral has been no exception. Sales plummeted by over 60% in 2020, and the following year the popular chain closed a quarter of its locations.
Two of its largest franchisees also went bankrupt: Orlando-based Operator 1069 Restaurant Group filed for Chapter 11 debt protection in late 2020, followed shortly thereafter by Platinum Corral, which filed for bankruptcy in April 2021. Between them, operators accounted for 12% of Golden Corral’s footprint.
Two years later, however, Golden Corral’s store count appears to have finally bottomed out — at about 360 units — and the chain is showing signs of recovery. With a significantly reduced footprint, sales returned to over $1 billion in 2021, and in 2022 comparable sales are currently up 30%.
Looking ahead, Golden Corral intends to invest in off-premises formats, with plans for a new fast-casual prototype with drive-thru facilities.
Friendly’s has filed for bankruptcy twice in the last 12 years — once in 2011 and then again in 2020. The family restaurant chain’s sales fell 40% during the pandemic, and store closures accounted for almost a fifth of the total.
But in the past year, Friendly’s have started to make a comeback. After a takeover by Amici Partners Group last year, sales have rebounded and restaurant closures have finally slowed – store counts bottomed out at 125 this year.
Going forward, the chain plans to further develop its mobile app, expand its digital marketing and invest in a new fast-casual prototype called Friendly’s Cafe, which will be geared towards off-premises sales.
Owen Duff is a freelance journalist from Vermont, home of Ben & Jerry’s. Continue reading