The fast-casual restaurant industry has faced significant challenges in the years following the COVID-19 pandemic, with many chains filing for bankruptcy amid rising costs and shifting consumer preferences.
While some restaurants successfully transitioned to delivery, takeout, and drive-thru models during the pandemic, the financial strain of closed dining rooms forced others to seek Chapter 11 bankruptcy protection or, in more severe cases, Chapter 7 liquidation.
Recent High-Profile Bankruptcies
Red Lobster became the most prominent chain to file for Chapter 11 bankruptcy in recent years, submitting its petition on May 19. As part of its reorganization, the chain permanently closed 93 restaurants.
Rubio’s Coastal Grill also filed for Chapter 11 bankruptcy on June 5, citing the impact of California’s AB 1228 legislation, which raised the minimum wage for fast-food workers at large chains to $20 per hour. Before its filing, the Mexican fast-casual chain operated 134 locations across California, Arizona, and Nevada but shuttered 48 locations in the Golden State.
The Italian restaurant segment has been particularly affected, with a history of financial distress:
- FoodFirst Global Restaurants, the parent company of Brio Tuscan Grille and Bravo Cucina Italiana, filed for Chapter 11 bankruptcy in April 2020 due to pandemic-related losses. The company was later acquired by Earl Enterprises.
- Johnny Carino’s Italian filed for bankruptcy twice, first in 2014 and again in 2016, citing ongoing financial struggles.
- Sbarro, a staple of mall food courts, filed for Chapter 11 in 2011 and again in 2014, struggling with high food, labor, and lease costs.
Buca di Beppo: A Recent Filing
The most recent filing comes from Buca di Beppo, a family-style Italian restaurant chain that filed for Chapter 11 bankruptcy on August 4. The Orlando-based company, owned by Earl Enterprises, attributed its financial challenges to declining sales, rising food and labor costs, staffing shortages, and evolving customer preferences.
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Court documents reveal that the company and its affiliates, listed as having $10 million to $50 million in liabilities, filed their petitions in the U.S. Bankruptcy Court for the Northern District of Texas. The chain hopes to restructure with the support of its lenders, stating this as a “strategic step” toward future stability.
As part of the restructuring, Buca di Beppo recently closed 13 underperforming locations, including restaurants in Sacramento and Salt Lake City. The chain now operates 44 locations across 14 states, along with two international locations, and is planning to open one new restaurant.
Looking Ahead
Rich Saultz, president of Buca di Beppo, expressed optimism about the restructuring process, stating:
“This is a strategic step towards a strong future for Buca di Beppo. While the restaurant industry has faced significant challenges, this move is the best next step for our brand. By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future.”
A Storied History
Founded in Minneapolis in 1993, Buca di Beppo grew to 95 locations by 2013 before gradually downsizing. The chain was acquired by Robert Earl’s Planet Hollywood International in 2008 and has since been managed under Earl Enterprises.
The challenges faced by Buca di Beppo and other fast-casual chains underscore the lasting impact of the pandemic on the restaurant industry, highlighting the need for adaptation in a rapidly changing market.
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