A growing number of restaurant franchise operators have sought bankruptcy protection in recent weeks, underscoring the financial pressures facing franchisees even as many of the brands they represent continue to expand.
Within the past two months, franchisees for Hardee’s, Mountain Mike’s Pizza, and Checkers have all filed for Chapter 11 bankruptcy, while one of California’s largest Carl’s Jr. operators continues restructuring after its spring filing. The cases highlight how rising labor and food costs, inflation and softer restaurant traffic are squeezing operators across the industry.
Hardee’s operator cites unexpected costs
The largest recent filing came from Superior Star LLC, a Hardee’s franchisee operating 59 restaurants across 10 states. The company filed for Chapter 11 on July 9, alleging it was burdened by millions of dollars in unexpected maintenance expenses, unpaid taxes, and other liabilities after acquiring the restaurants in 2023. Superior Star also cited higher food costs and weaker consumer demand as contributing factors.
Pizza and burger franchisees also seek protection
On July 1, Rogue Fare LLC, which operates five Mountain Mike’s Pizza restaurants in Oregon, filed for Chapter 11 bankruptcy. The franchisor emphasized the filing affects only the franchisee and not the broader chain, which continues expanding nationwide.
Another recent filing came from C.S. Holdings of Tampa LLC, a Checkers franchisee operating two Florida restaurants, which also sought Chapter 11 protection amid ongoing financial challenges.
Meanwhile, Friendly Franchisees Corporation, one of California’s largest Carl’s Jr. operators, is moving forward with plans to close 10 restaurants and sell 49 others as part of its Chapter 11 restructuring. The company has attributed its financial difficulties to higher labor costs, declining sales and broader operating challenges.
Industry pressures persist
While each bankruptcy involves individual franchise operators rather than the restaurant brands themselves, the filings reflect persistent challenges across the restaurant industry. Many operators continue grappling with elevated operating expenses, tighter consumer spending and increased competition, forcing some franchisees to restructure even as franchisors pursue new restaurant openings and expansion strategies.
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