Outback Steakhouse operator files Chapter 11 on $449M debt

Key Points:

• Cerca Trova Restaurant Group, a major Outback Steakhouse franchise operator based in San Diego, filed for Chapter 11 bankruptcy protection due to $449 million in debt, citing high labor costs, rising food prices, and declining customer traffic as key factors.
• The company operates 61 Outback Steakhouse locations primarily in California and neighboring states, with over half its employees in California, where minimum wages have significantly increased to $16.90 per hour statewide and $20 per hour for fast-food workers.
• Cerca Trova’s financial troubles have worsened as debt grew from $269 million in 2020 to $449 million in 2024, driven by inflation, rising operating expenses, and higher beef prices, leading to multiple restaurant closures in California.
• Bloomin’ Brands, Outback’s parent company, is the leading bidder to acquire Cerca Trova’s assets for $26.3 million and has pledged up to $5.5 million in financing during bankruptcy, emphasizing that the franchisee’s bankruptcy does not impact Bloomin’ Brands’ overall business.
• The bankruptcy highlights ongoing challenges in California’s restaurant industry amid wage hikes and inflation, with other chains like Carl’s Jr. and Red Lobster also facing financial distress and closures nationwide.