Summit Restaurant Holdings, a significant operator of Hardee’s restaurants in multiple states, filed for Chapter 11 bankruptcy recently after liquidating 39 locations.
The corporation, which has a secured debt of $22 million, previously operated 145 restaurants across Alabama, Florida, Georgia, South Carolina, Kansas, Missouri, and Wyoming. It is part of a larger corporation that also includes Carl’s Jr. restaurants and has 226 locations in 16 states.
According to multiple court records, the corporation presently operates 108 locations, albeit there is a two-restaurant mismatch according to the bankruptcy case. Also, as per the court filings, Summit intends to use the bankruptcy process to locate a buyer. The corporation has an arrangement with a “stalking horse” bidder to provide the opening bid in the restaurants’ bankruptcy court auction.
Hardee’s parent company, CKE Restaurants Holdings, said in a statement that the restaurants will be sold to a “qualified and well-capitalized buyer, with a record of success across the restaurant, entertainment, food, beverage and retail markets.”
“CKE’s goal is to maintain the maximum number of stores continuing to operate, backed by a capital structure that is sustainable and poised for long-term growth and success, and we are working with all parties to achieve that goal,” CKE stated.
Summit suffered with falling traffic during the epidemic and following demands on growing food and labor prices, which robbed the company of financial flow, according to court filings. Many of the 145 restaurants underperformed due to decreased unit volumes and profit margins, making them more vulnerable to rising expenses. Some establishments “were operating at a loss for a prolonged period of time.” Six weeks ago, the company, which had gone into debt default, hired an investment banker to find a buyer.
Several franchisees have declared bankruptcy this year due to rising costs, particularly in chains that did not recover as well as others from the pandemic. This includes two significant Burger King franchisees who declared bankruptcy earlier this year.
According to statistics from Restaurant Business sister firm Technomic, system sales in the United States will fall 4.2% in 2022, to little under $2 billion. The average unit volume fell 3% to less than $1.2 million.
“Hardee’s is focused on its core customer and the products they crave, as well as investing in the physical infrastructure of restaurants, to grow traffic and sales,” CKE stated.
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