Rising food costs prompt big Outback Steakhouse franchisee to file for bankruptcy

Key Points:

• Cerca Trova Restaurant Group Holdings, a major owner of 61 Outback Steakhouse locations on the West Coast, filed for Chapter 11 bankruptcy citing rising food costs, reduced foot traffic, and increased labor expenses.
• The company proposed selling its assets to Outback owner Bloomin’ Brands for $26.3 million amid financial struggles exacerbated by pandemic recovery challenges and wage-related class action lawsuits in California.
• Cerca Trova faced significant legal and financial pressures, including a $1.6 million wage-and-hour settlement and new lawsuits alleging unpaid overtime and missed meal breaks, which strained its liquidity.
• The franchisee's financial difficulties were worsened by increased beef prices and pandemic-era debt, with only $3.6 million cash on hand at the time of the bankruptcy filing.
• Bloomin’ Brands stated the bankruptcy is isolated to the franchisee and does not impact its corporate operations or financial stability.