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Chapter 11 and the restaurant business

On Behalf of | Jan 10, 2018 | blog

The last few years has seen scores of familiar names look to bankruptcy protection: Howard Johnson, Fox & Hound, ChiChi’s, Steak & Ale, Macaroni Grill, Sbarro’s, Old Country Buffet to name a few. Even McDonald’s, the king of the restaurant industry, is struggling to stay in the black.

And those are just the well-known chains. Many single-location restaurants are forced to conclude that the dream is not working out, and to seek protection against creditors.

Starting a restaurant is one of the great American entrepreneurial ideas. Some succeed wonderfully, but many have trouble making a place for themselves in a fickle economy.

Many reasons to fail

The reasons are well known. Profit margins are slim, while costs can fluctuate wildly. Food service is among the most competitive of industries. A history of past success is no guarantee of success in the current market. You can be successful in one way – growth, expansion, reputation – but be unable to keep up with the customer expectations.

Very often, companies look to bankruptcy to get out from under prohibitive leases that are making business sales impossible.

At the Law Offices of Buddy D Ford, of Tampa, we work to give restaurant owners – as well as owners of hotels, strip malls, motor home parks, apartment complexes, and nurseries – time to strengthen their bottom lines or proceed to selling off assets. We work with both franchisors and franchisees.

Stepping back to continue forward

We assist restaurant owners who are overextended to cut back to a size that can be managed, and those who need relief from their lease. Chapter 11 is frequently a prelude to selling the business.

Often, restaurant businesses will file Chapter 11 to facilitate a sale of the business as a going concern.  Chapter 11 isn’t a magic wand – but it can buy you time to reconfigure and – if this is your plan – to come back stronger than before.