Major Outback Steakhouse franchisee bankruptcy sparks warning from expert
Fox Business • • business
Key Points:
- Out West Restaurant Group, an Outback Steakhouse franchisee operating 61 locations, filed for Chapter 11 bankruptcy citing California’s high labor costs, inflation, and rising beef prices as key factors in its financial distress.
- CEO David Goronkin highlighted shrinking customer traffic and escalating operational expenses, including California’s minimum wage increase to $19.60 per hour, as major pressures leading to the company’s decline.
- Entrepreneur Marcus Lemonis emphasized the need for businesses to adapt and make difficult decisions regardless of location, noting that many companies still thrive in California despite high costs.
- Out West is seeking court approval to sell its assets as part of its restructuring, with parent company Bloomin' Brands agreeing to buy the 61 Outback locations for $26.3 million and providing up to $5.5 million in interest-free financing.
- The situation underscores ongoing challenges for full-service restaurants in California, which face higher labor costs compared to fast-food chains exempt from the state's $20-per-hour minimum wage law passed in 2024.
