A 17-Unit Franchisee Now Files For an Unexpected Bankruptcy

February 6, 2024

A 17-unit franchisee now files for an unexpected bankruptcy after major losses at three of its locations push the operator for protection.

RRG, a 17-unit Popeyes franchisee based in Georgia, filed for Chapter 11 bankruptcy protections at the end of January, court records from the U.S. Bankruptcy Court for the Southern District of Georgia show.

RRG “intends to continue the operation of its business during the bankruptcy while eliminating poor performing locations,” the operator said in court documents.

The Popeyes operator is one of the first multi-unit franchisees to file for bankruptcy in 2024, and the second Popeyes operator to file since last March, when Premier Cajun Kings sought Chapter 11 protections after the death of its owner cast the company into disorder, reports Restaurant Dive.

With cost pressures holding steady in 2024, experts say more franchisees may fall into default this year.

Franchisees that borrowed extensively during the pandemic may be at risk of default, given the slippage of margins and traffic relative to 2020 and 2021 and the high cost of money, finance and bankruptcy experts say.

In November 2023, three separate multi-unit franchisees of different restaurant companies — Wendy’s, Burger King, and Denny’s — all filed for bankruptcy.

The fall of RRG has extended the run of multi-unit franchisee bankruptcies into 2024.

The failure of three of RRG’s restaurants is the proximate cause for the bankruptcy, court records show.

These restaurants lost money and became a burden on the remaining restaurants operated by RRG, which was then unable to meet the lease terms on its remaining restaurants.

The company “needs to cure those arrearages to avoid lease termination,” according to court documents.

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Also Read: A Home Furniture Retailer Now Files For Unexpected Bankruptcy

Other Economy News Today

A massive beverage distributor now shutters in Texas and will lay off 109 employees starting in late February.

Jumbo Beverages, a subsidiary of Glazer’s Beer and Beverages, is permanently shuttering a warehouse in Grapevine, Texas, on Feb. 29, according to a WARN filing.

The closure will impact 109 employees, with a majority of the layoffs expected to occur on Feb. 29, while remaining employees will be separated on April 30, according to a notice emailed to Supply Chain Dive.

The letter didn’t state why the distributor is closing its warehouse.

Jumbo Beverages is a subsidiary of distributor Glazer’s Beer and Beverage, and represents 34 beverage companies, including Nesquik, San Pellegrino and Fiji Water, across 13 counties in North Texas, according to the company’s website.

While Jumbo Beverages may be closing its facility, other beverage distributors have been investing in their warehouse operations.

Southern Glazer’s Wine and Spirits, for instance, is planning to deploy AI technology and robotics warehouse automation in select distribution centers by 2025, reports Supply Chain Dive.

“The tech aims to improve order accuracy, fill rates and increase capacity.”

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