A Popeyes chicken franchise owner has gone bankrupt because some stores lost money. In late January, the company RRG, which runs about 17 Popeyes restaurants in Georgia, told the U.S.
Bankruptcy Court for the Southern District of Georgia that they needed to reorganize their business under Chapter 11 bankruptcy rules.
RRG Faces Lease Challenges Due to Losses at Three Stores
RRG, the owner of several Popeyes outlets, admitted in court papers that they had a tough time because three restaurants were not making enough money. This made it hard for them to pay the rent for their other 14 locations.
The company plans to shut down these three underperforming stores. They explained that they must fix these payment issues to stop their leases from being canceled. It's not clear why these three Popeyes restaurants were losing money.
RRG's lawyer has not yet answered questions about why three of their Popeyes stores are not making money. The company's first legal filing showed they owe between $1 million and $10 million to 100-199 different people or companies.
RRG has not paid the total rent to at least 11 landlords. They owe amounts ranging from $21,442.75 to one landlord and $238,595.13 to another. This information comes from a list of the 20 people or companies to which they owe the most money.
Besides rent, RRG has a lot of debt because of the supplies they bought for their restaurants.
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RRG Plans to Keep Most Stores Open
The court papers also mentioned RRG's debts for restaurant supplies. Despite this, the people running RRG said that apart from the three stores that are not doing well, their other Popeyes locations will stay open. They plan to keep their business going during the bankruptcy process by closing only the stores that are not making money.
RRG is not the only Popeyes franchisee facing such issues. In March 2023, another franchisee, Premier Cajun Kings, had to ask for bankruptcy protection under Chapter 11 after its owner passed away unexpectedly.
Several American franchisees of Restaurant Brands International, which owns Popeyes, including Premier Cajun Kings and major Burger King operators, have declared bankruptcy in the past year. This series of bankruptcies led the parent company to start a new plan.
They want to better organize their Burger King franchisees and continue their $400 million project to improve branding and restaurants, called 'Reclaim the Flame.'
So far, Restaurant Brands International hasn't said if they will take any special steps to help franchisees like RRG and Premier Cajun Kings, who have also gone bankrupt.
Experts in the fast food industry and company leaders are worried that more franchise owners might fail in 2024, which could lead to many restaurants closing, as reported by Restaurant Dive. Many of these businesses had to borrow a lot of money during the worst COVID-19 pandemic in 2020 and are still trying to get back on their feet.
This financial strain is becoming apparent. In November alone, owners of several Denny's, Wendy's, and Burger King outlets filed for bankruptcy. The U.S. Sun had earlier reported that a Hardee's owner with 39 locations also went bankrupt last May.
This Hardee's owner, Summit Restaurant Holdings, once managed 145 restaurants. They said that higher costs for food and workers after the pandemic, along with fewer customers, were big problems. When they filed for bankruptcy, they were looking for a buyer to help save their remaining 108 stores, but it's unknown if they found one.
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