Some define the restaurant industry as a roller coaster. Fair enough. While every business has its ups and downs, ours is sometimes exhilarating and other times slightly terrifying.
But, through it all, it’s extremely fun.
Here, we’ll highlight some of the industry’s news-making headlines, from restaurant entrepreneurs making billions to a world-renowned restaurant filing for bankruptcy.
Let’s get started.
The Bad News
According to Psychology Today and Inc., it’s best to start with the bad news and get it out of the way. We also get to end on a good note.
So, here goes.
Whether you love or dislike the image surrounding Hooters, we hate to see an icon head to the bankruptcy courts. While it faced criticism for its uniform requirements and sometimes tacky image, it’s a brand that took the world by storm.
What started in 1983 by six businessmen with no restaurant industry experience turned into 420 locations in 29 countries. Today, the company owns 154 locations, and franchisees operate 151, as reported by KTLA. Not bad. So, what happened?
According to Fox, mounting debt, coming in at a whopping $376 million, is the primary reason the company filed for Chapter 11 bankruptcy. The plan is to sell its corporate-owned restaurants to a buyer group consisting of two current franchisees backed by some of the original founders. This act transitions it into a pure franchise business model.
As part of the restructuring, the company secured about $35 million in financing from current lenders and, like many other chains, is reporting inflation, rising costs, and reduced consumer spending as the behind-the-scenes reason for their current financial situation.
Hooters’ press release states, “Hooters is here to stay, and we are taking action to strengthen our business to better serve our valued customers over the long term.”
While Hooters may be here to stay, there are a few restaurants in Chicago that have closed their doors for good. Eater Chicago reported on the closure of Alinea’s supper club, Bar Louie, and Aurelio’s Pizza.
The Alinea Group’s St. Clair Supper Club closed at the end of March after being in business for almost six years. It may not be gone forever, but segue into a larger home.
Bar Louie, another brand heading to the bankruptcy courts, was founded in Chicago in 1991. This gastro bar chain holds 31 company locations and 17 franchise spots, and it recently closed 31 locations across nine states, according to KTLA.
Its second bankruptcy, the first one took place in 2020 when it was purchased by BLH TopCo. Like Hooters, the company reported that inflationary pressures, consumer cutbacks, and rising food, labor, and utility costs are at the core of their current financial challenges.
Aurelio’s Pizza, the oldest Chicago pizza franchise restaurant, will close the city’s only location in the South Loop in about one month. The reason? Aurelio’s Pizza is expanding to new territories and currently has 35 locations in five states.
The Good News
While not quite as dramatic, we love to hear about people making it big in the restaurant industry. To that end, we announce two restaurateurs who made it to Forbes‘ World Billionaires list.
Tony Townley and Zach McLeroy invested $16,000 into chicken fingers and their fast food chain, Zaxby’s, in 1990. It started as a venture dreamed up by two best friends who met in middle school and a chicken finger restaurant near Georgia Southern University. Today, they are worth $1.2 billion and $1 billion, respectively. In 2023, Zaxby’s sales reached $2.5 billion.
Other restaurateurs to make Forbes’ list include Steve Ells, founder of Chipotle, Peter Cancro, founder of Jersey Mike’s, and Ron Shaich, Cava chairman.
At EMERGING Fund, a growth capital fund at the forefront of the technology-driven opportunities in the restaurant industry, we’re all about good news. As a network of operating companies, we provide unmatched competitive advantages. From strategic growth resources and mentorships to the largest food and beverage network and a group of general partners and investors who have scaled companies to top industry valuations, good news is our forte.
To learn more about our unsurpassed team of partners and investment opportunities, contact EMERGING Fund.
