Restaurant Chains Shutter Dozens of Locations Amid Bankruptcy Wave

The casual dining sector is facing a harsh reckoning. A wave of bankruptcies is sweeping through restaurant chains, forcing the permanent closure of hundreds of locations as companies buckle under unsustainable debt and seek protection in court.

This restructuring process often begins with the shuttering of underperforming stores, a move seen in recent filings from operators like Bravo Brio Restaurants and On The Border. The trend highlights the fragile economics of the industry, where even established brands are not immune. According to U.S. Bureau of Labor Statistics data cited by Owner.com, while about 83.1% of restaurants survive their first year, that figure drops sharply to just 34.6% over a decade.

The latest significant filing comes from FAT Brands Inc. The Beverly Hills-based operator, which runs a portfolio of 18 brands including Fatburger and Round Table Pizza, filed for Chapter 11 bankruptcy protection on January 26. Court documents reveal the company has already closed 32 company-owned locations across its Smokey Bones, Yalla Mediterranean, and Johnny Rockets banners and is seeking court approval to reject those leases. The move would eliminate over $492,000 in monthly lease obligations.

FAT Brands' financial troubles came to a head after it defaulted on a $1.3 billion debt payment in late October. In a November SEC filing, the company admitted it lacked the funds to make the payment, warning that foreclosure actions could force it into bankruptcy.

"The Chapter 11 process will provide us with the opportunity to strengthen our capital structure to support our concepts," said FAT Brands CEO Andy Wiederhorn in a statement, framing the filing as a strategic step for long-term viability.

This filing is part of a broader pattern. Over the past two years, familiar names like Red Lobster, TGI Fridays, and Buca di Beppo have all sought Chapter 11 protection, signaling deep-seated challenges beyond any single company's missteps. Analysts point to a combination of high leverage from pre-pandemic and pandemic-era financing, rising operational costs, and changing dining preferences as key pressures squeezing the sector.

Voices from the Community

Michael Torres, Small Business Advocate: "This is devastating for the employees and the local economies that relied on these restaurants. Each closure represents dozens of lost jobs and empty storefronts. It's a stark reminder of how corporate debt decisions have real human consequences."

Sarah Chen, Restaurant Industry Analyst: "The FAT Brands portfolio is a case study in over-expansion through debt-fueled acquisition. The model of aggregating diverse brands under one heavily leveraged umbrella is being stress-tested, and it's failing. This bankruptcy wave should prompt a serious industry-wide review of financial discipline."

David R. Miller, Former Franchisee (Voice raised, emotional): "It's absolute mismanagement! They loaded these companies with debt, squeezed franchisees for every penny, and now communities are left with hollowed-out shells. The CEOs walk away, but what about the line cooks, the servers, the families? It's a disgrace—a predictable, greed-driven disgrace."

Linda Fitzgerald, Retail Commercial Landlord: "The lease rejections are a major concern. It floods the market with vacant restaurant spaces at a time when demand is soft. It will take years for some of these properties to recover their value, impacting property taxes and local services."

This analysis is based on original reporting and court filings. It first appeared in the Restaurants section.