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Arby’s franchisee Miracle Restaurant Group has filed for Chapter 11 bankruptcy protection for the second time in its history. The Louisiana-based company, which once operated over 60 restaurants, cited a number of challenges responsible for the move.
The Covington, Louisiana-based company, has seen its footprint shrink to just 25 locations across five states: Illinois, Indiana, Texas, Mississippi, and Louisiana.
They cited similar reasons as Red Lobster for the bankruptcy filing:
- Weak Sales: The company reported negative same-store sales in 2023 and the first half of 2024. This means that existing stores were not bringing in enough revenue compared to previous periods.
- High Costs: Rising costs of food and operation squeezed profit margins for Miracle Restaurant Group.
- Underperforming Locations: The company struggled to sell some of its restaurants, which were losing money consistently.
This latest bankruptcy filing comes just four years after Miracle Restaurant Group emerged from its first Chapter 11 filing in 2010. At that time, the company closed a number of under-performing locations and restructured its debt.
The recent struggles of Miracle Restaurant Group reflect a broader trend in the fast-food industry. Several franchisees of major chains like Burger King, McDonald’s, and Wendy’s have also filed for bankruptcy in 2023 and 2024.
Analysts point to a confluence of factors contributing to these failures, including rising costs, increased competition, and changing consumer preferences.
Arby’s had another blow last week when the iconic Arby’s on Sunset Boulevard, known for its giant neon cowboy hat sign, shut its doors after 55 years in business. The restaurant had been a fixture on the bustling boulevard, serving roast beef sandwiches to hungry Angelenos for generations. The closure marked the end of an era for Hollywood, with its signature sign going dark and the familiar sight of cars lined up at the drive-thru replaced by a farewell message
Like many in California, the legendary Arby’s fell victim to rising costs, and the minimum wage hike law going into effect.
Miracle Restaurant Group has requested relief from its landlords and Arby’s franchisor, but the outcome of those negotiations remains unclear.
With an estimated 200-999 creditors and $1 million to $10 million in liabilities, Miracle Restaurant Group will need to develop a plan to restructure its debt and improve profitability.
The company has hired Peak Franchise Capital to help sell some of its underperforming locations. This could be a way to generate cash to pay creditors and potentially keep some restaurants open.
The overall outlook for Miracle Restaurant Group is not positive, and like Red Lobster, they’re taking measures to survive but it’s not assured it will work. According to their website, they have hope in overcoming this latest struggle: “We have faced difficult decisions and have not shied away from making decisions that we felt were in the best interests of our calling. Our hope for the future is firm and our commitment is unwavering.”
