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Corporate bankruptcy filings increased significantly during the first months of the pandemic, according to a 2020 study from Harvard Business School. Between January 1 and August 31, filings with assets valued at $50 million or more shot up nearly 200% on a one-year basis.
While those figures might not sound surprising, it’s worth noting that filings did not increase at the same rate among small businesses. In fact, bankruptcies for small businesses actually decreased in the first months of the pandemic.
The Harvard study confirmed the “very different role” that bankruptcy plays for large corporations as compared to individual consumers and small firms. While corporations are adept at using bankruptcy as a source of debt protection, smaller businesses are more likely to refrain from filing, and to view bankruptcy as “a last resort.”
With that difference in approach and attitude in mind, here’s a look at four restaurant chains making the biggest comebacks after bankruptcy.
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California Pizza Kitchen was hit hard by the pandemic: dine-in sales at the chain dropped a precipitous 77% in the last week of March of 2020, and by the end of the year the chain had lost more than a tenth of its store count. When CPK declared bankruptcy in July of 2020, it was $403 million in debt.
Not long after the filing though, a debt-for-equity deal was secured, decreasing the overall debt load by $220 million. With its finances in better shape—and with a major menu upgrade—business at the chain has rebounded in the past two years. In 2021, annual sales climbed back to $490 million. CPK will be expanding in the near future, with plans for development abroad and the launch of a new domestic franchising program.
The steakhouse chain’s parent company, CraftWorks Holdings, declared bankruptcy in March of 2020, furloughing almost all of its 18 thousand employees.
Not long after, however, Nashville-based restaurant group SPB Hospitality acquired the CraftWorks portfolio for $93 million.
Logan’s Roadhouse has so far thrived under the new leadership: SPB has winnowed Logan’s footprint down to a lean 146 restaurants and has succeeded in restoring sales. Following a decline of nearly 50% in 2020, annual sales bounced back in 2021 to $417 million.
Buffet chains were particularly hard-hit by the pandemic, and Golden Corral was no exception. Sales plummeted over 60% in 2020, and in the year following, the beloved chain closed a quarter of all locations.
It also saw two of its largest franchisees go bankrupt: Orlando-based Operator 1069 Restaurant Group filed for Chapter 11 debt protection in late 2020, followed soon after by Platinum Corral, which declared bankruptcy in April of 2021. Between them, the operators accounted for over 12% of the Golden Corral footprint.
Two years later, however, Golden Corral’s store count appears to have finally bottomed out—at about 360 units—and the chain is showing signs of recovery. Operating on a significantly reduced footprint, revenue climbed back to above $1 billion in 2021 and in 2022 comparable sales are currently up 30%.
Looking ahead, Golden Corral intends to invest in off-premise formats, with plans for a new drive-thru-equipped fast-casual prototype.
Friendly’s has declared bankruptcy twice in the past twelve years—once in 2011, and then again in 2020. Sales at the family dining chain plummeted 40% during the pandemic, and store closures totaled nearly a fifth of the overall footprint.
But in the past year, Friendly’s has started making a comeback. Following an acquisition last year by Amici Partners Group, sales have picked back up and restaurant closures have finally slowed—the store count bottomed out this year at 125.
Moving forward, the chain plans to further develop its mobile app, expand its digital marketing, and invest in a new fast-casual prototype called Friendly’s Cafe, which will be geared towards off-premise sales.