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Restaurants Seek Additional Help to Survive Pandemic


The restaurant industry has been hammered during the recent pandemic, and a wave of bankruptcy filings could be on the horizon. Health officials have identified indoor dining as a vector for transmission of the coronavirus, so countless restaurants have been closed in the past few months.

Around the state, many restaurants and chains have had to file for bankruptcy. The National Restaurant Association (NRA) has asked Congress for help. It sent a list of policy proposals to Washington seeking immediate relief to stabilize the industry. The NRA notes that their industry has been harder hit than others, but that Congress has not taken any action specifically for the restaurant industry.

One in Three Restaurants Could Disappear

The declines have been felt across the entire restaurant industry, affecting casual, fast food, and upscale dining alike. According to Darden, which manages many large chains across the U.S., sales have plunged over 40%–a staggering decline. A different report estimated that about 30% of restaurants could close by the end of 2020.

The NRA recommends that Congress create a long-term loan program that surpasses the current Paycheck Protection Program (PPP). The loans would help restaurants retain or rehire qualified employees and provide at least 6 months of operating costs. The industry group also wants restaurant workers to be prioritized when it comes to testing for COVID-19. In total, the stabilization fund requested would equal $120 billion.

Restaurant Chain Closures

Some of the largest chains in the country have been kept afloat with PPP loans, including Wendy’s and McDonald’s. However, the debt loads for some restaurants have been too much. Consequently, some chains have had to file for bankruptcy, including NPC International, which was the largest Pizza Hut franchisee in the nation.

Chuck E. Cheese’s parent company, CEC Entertainment, also filed for Chapter 11 protection in late June. The company had nearly $2 billion in liabilities as of late 2019. Filing for Chapter 11 allows the company to continue operating as it tries to reorganize debts, but the ongoing pandemic could make it difficult for them to reopen successfully in the coming months.

Garden Fresh Restaurants also filed for bankruptcy in May. However, they filed for Chapter 7, which means that the company will be liquidated. The company had $50-100 million in liabilities. Garden Fresh Restaurants was the parent company for Sweet Tomatoes and Souplantation restaurants.

TooJay’s deli filed for bankruptcy in April, early in the pandemic. The company has 16 restaurants in South Florida when it filed, including locations in Plantation, Boca Raton, and Coral Springs. The company obtained a $6.4 million PPP loan but still needed to file for Chapter 11 protection to deal with between $10 and $50 million in debts.

Do You Need to Discuss Your Options?

Without dramatic government assistance, many more restaurants will need to file for bankruptcy protection in the coming months. At Nowack & Olson, our Plantation bankruptcy lawyers have assisted many small businesses work through the bankruptcy process. We can discuss the best steps for your company to take and prepare a filing, if that is what you decide. Contact us to schedule a consultation at 888-813-4737.






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