One of the nation’s largest Outback Steakhouse restaurant owners filed for bankruptcy this week, citing rising food prices in part.
Cerca Trova Restaurant Group Holdings, owner of 61 restaurants on the West Coast, filed for Chapter 11 bankruptcy earlier this week.
He pointed to reduced foot traffic and slow recovery from the pandemic, as well as rising food prices and unexpected labor costs.
“By 2026, the pressures on the company had converged,” CEO David Goronkin said in a court filing cited by Bloomberg News. “Visitor traffic and revenue continued to decline, while food, labor and other production costs continued to rise. »
Cerca Trova has offered to sell its assets to Outback owner Bloomin’ Brands for a cool $26.3 million.
Last summer, a California court approved a $1.6 million wage and hour class action settlement against Cerca Trova, which has nearly 3,670 employees. Two new class-action lawsuits have been filed against the company in the state, where 31 of its locations are located, according to court documents.
In one of the cases, the franchisee was accused of failing to pay overtime and minimum wage, as well as failing to provide meals or rest breaks.
In court documents, the company said it could not make settlement payments “without having a significant impact on its liquidity.”
It was not immediately clear how the bankruptcy might affect settlement payments.
Cerca Trova has also struggled with recent local and state minimum wage increases in California.
The company was really booming in 2018, when the group owned 99 Outback restaurants with annual revenue of around $340 million, making it the largest Outback franchise owner in the country.
The franchisee — with locations in Arizona, Colorado, Nevada and New Mexico, in addition to California — took on debt during the pandemic.
Even though sales recovered, the group was unable to get out of accumulated interest.
Rising food prices also weighed on Cerca Trova. Its biggest expense was beef, which saw an increase of 15 to 20 percent in 2022 — and about 5 percent annually since then, according to court documents.
The company had about $3.6 million in cash when it filed for bankruptcy.
A spokesperson for Bloomin’ Brands said the bankruptcy is “an isolated situation involving the franchisee and does not affect the operations, financing or liquidity of the Bloomin’ Brands business.”
Lawyers for the Cerca Trova restaurant did not immediately respond to a request for comment.
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