Why are so many restaurant chains filing for bankruptcy this year?

Published On Sep 4, 2024, 2:00 AM

In 2024, the restaurant sector is experiencing a surge in Chapter 11 bankruptcy filings, reaching 17 by early September, nearly double from 9 at the same time the previous year. Key contributing factors include post-pandemic economic challenges, rising labor and input costs, shifts in consumer behavior, and inflation. High interest rates are tightening profit margins, making it more difficult for restaurant chains to operate. However, filing for bankruptcy does not necessarily mean these businesses are closing down; it often allows them to restructure finances and renegotiate leases. Red Lobster, for example, aims to exit long-term agreements with landlords as part of its restructuring.