Popular Fast-Food Chain Declares Bankruptcy Amidst Legal Battles

Operating 12 locations in New York and New Jersey, the brand is struggling to keep the business afloat under growing financial pressure.

Their largest creditor, US Foods, is owed a hefty $449,000. This stark financial reality underscores the deep economic challenges they face as they navigate through restructuring.

The Street reports that the new norm of shorter work weeks has thinned out the crowds that used to pop by during their work breaks, heavily impacting sales.

Unfortunately, this move led to even fewer patrons, further straining Sticky’s already precarious financial situation.

The move ended up costing more than it saved when a court ruled that Sticky’s had to pay damages to the landlord for breaking the lease early, adding salt to their financial wounds.

A court ruled that Sticky’s must cover the remaining rent and legal fees, a decision that cost them $600,000. The battle continues as Sticky’s has chosen to appeal this costly judgment.

CEO Jamie Greer emphasized that while this wasn’t a complete solution, it was critical for the company’s efforts to keep going and restructure.

This strategic pivot is intended to manage debts and maintain operations, aiming to preserve the chain’s presence in the community.

This highlights a troubling trend of financial instability sweeping across the U.S. restaurant industry.

Plans to expand through franchising have been put on hold, with no new franchise operations coming to fruition.

Despite the setbacks and location closures, they strive to keep serving their customers and maintain a foothold in the competitive fast-food landscape.

CEO Jamie Greer stated, “The Debtors look forward to working with their creditors, vendors, and other parties in interest as they chart a path to restructuring their balance sheet.” This proactive approach is vital for their hopes of bouncing back and continuing to serve their clientele.

Earlier this year, the parent company of Boxer Ramen filed for Chapter 11 bankruptcy protection.

Boxer has pointed to ongoing high inflation issues, as well as pandemic-era factors that continue to hamper the restaurant chain as why they’ve had to fully shut down all their locations.

Just last year, in December of 2023, Boxer opened up a brand new location, followed by another new spot in January. This decision to shut down their locations for good is just the latest insight into how restaurants are severely struggling in 2024 throughout the United States.

Red Lobster is one of the biggest restaurant chains in the United States. The restaurant has reportedly struggled to deal with high food costs because of inflation, high labor costs, and operating losses.

Analysts have been warning that a slowing of customer traffic, as well as restaurants having high prices because of high inflation, may continue to hamper restaurant businesses into 2024.

Though the restaurant’s sales haven’t dropped yet, this is likely because they’ve raised menu prices by 4%. During the restaurant’s first quarter, however, they saw a major 7.1% decrease in foot traffic.

For example, Denny’s had to close 57 locations in 2023 because of high inflation costs. It appears that even more Denny’s locations may close in some areas in 2024 — even though the company also stated they would like to open up 30 new restaurants this year.

This comes after the chain already closed 46 different locations throughout 2023. Since 2017 alone, about 300 Applebee’s restaurants have been closed.

While Outback Steakhouse had to close dozens of stores recently, its parent company Bloomin’ Brands has plans to open 18 new restaurants in 2024.

The rising cost of food has resulted in many consumers refusing to eat out as much as they did before. As a result, the post-pandemic demand for eating out that has been so high in the past few years may finally be coming to an end.

In reality, restaurants throughout the country are facing difficulties. Many restaurants in Texas are continuing to struggle, even after they managed to survive the pandemic.

As a result of this ongoing problem, the country’s chain restaurants may continue to see bankruptcy filings and sudden closures.