The proprietor of 57 Burger King eating places filed for chapter, blaming excessive labor prices and inflation for forcing its firm to go below, in line with courtroom paperwork.
Consolidated Burger Holdings – considered one of Burger King’s largest franchisees – owes practically $37 million to collectors and filed for Chapter 11 chapter safety on Monday.
It’s searching for to promote its property via a court-supervised course of.
“Recent increases in costs of shipping and food, decreased availability of labor and inflation” worsened points for the franchisee, stated Joseph Luzinski, the corporate’s chief restructuring officer.
The corporate’s eating places are positioned within the Florida Panhandle, together with 9 places in Tallahassee, and southern Georgia.
A number of massive Burger King franchisees have filed for chapter over the previous few years, nonetheless reeling from the COVID-19 pandemic and sticky inflation, which decimated foot site visitors and gross sales at fast-food chains.
Consolidated Burger Holdings’ chapter is the results of “significant foot traffic and revenue declines without a corresponding drop in rent costs, debt or other liabilities,” Luzinski stated in courtroom paperwork.
The agency owes $36.64 million to lower than 1,000 collectors after working some shops at a loss, the chapter paperwork stated.
In its most up-to-date fiscal 12 months, the franchisee reported gross sales of $67 million and a web working lack of $12.5 million.
It suffered a $6.3 million loss in fiscal 12 months 2023, as nicely.
Burger King sued Consolidated Burger Holdings in January 2024, alleging the franchisee broke agreements to considerably rework and enhance places.
The 2 corporations reached a settlement in September.
“The Burger King system is far stronger today because of our focus on great Franchisees who are committed to investing in their restaurants and teams for the long-term,” a Burger King spokesperson informed The Publish in an announcement.
“This means a small number of franchisees who are no longer investing in their restaurants will be exiting the system. We are working quickly to get these restaurants transferred to high-performing operators.”
In courtroom paperwork, the franchisee claimed it spent tens of millions on upgrades and remodels throughout its Burger King shops.
The corporate has seen a number of different main Burger King franchisees file for chapter within the aftermath of the pandemic.
Meridian Eating places Limitless, Toms Kings and Premier Kings all filed for chapter in 2023. The three franchisees operated a mixed 378 Burger King places.
