Refer Report

The U.S. restaurant industry has been experiencing a massive wave of bankruptcies this year due to declining consumer spending and high interest rates.

According to the American economic media outlet CNBC on the 1st (local time), more than 10 restaurant chains in the United States, excluding franchises, have filed for Chapter 11 (Article 11 of the U.S. Federal Bankruptcy Code) rehabilitation procedures (court receivership) this year. In August alone, bankruptcy filings for three restaurant chains were filed.

Roti, a Mediterranean fast-casual chain with 22 locations across the United States, filed for bankruptcy on March 23. CEO Justin Simmons explained at the time of filing that “half of our locations, located in downtown business districts, suffered during the COVID-19 pandemic,” and that “the recent slowdown in consumer spending ultimately led to the bankruptcy.”

Italian restaurant chain Bucardi Veppo declared bankruptcy on May 5, citing rising costs and staffing issues as the main causes of its financial difficulties. Tavern chain World of Beer also filed for bankruptcy protection on May 2, citing high interest rates, inflation, and a slow return to pre-pandemic eating habits.

CNBC analyzed that “bankruptcies are on the rise as consumers cut back on spending, labor costs continue to rise, and government support received during the pandemic disappears,” and “more restaurant chains are likely to file for bankruptcy by the end of the year.” Anthony’s Pizza & Wings, which owns Anthony’s Coal-Oven Pizza & Wings, said in a filing with regulators last month that there is “substantial doubt about the company’s ability to operate.” Mode Pizza narrowly avoided bankruptcy through a last-minute sale.

Bankruptcy filings aren’t limited to the restaurant industry. According to Bank Rush Watch, there were 219 Chapter 11 filings this year through the 19th of last month, a 47% increase from the same period last year (149).

CNBC noted that “it shows that the economic recovery is uneven and that many individuals and businesses still face serious financial difficulties.”

Reporter Im Da-yeon allopen@hankyung.com

Source: Korean