Restaurant chain bankruptcy highlights pressure on businesses to adapt

Marcus Lemonis, an entrepreneur and FOX Business contributor, commented on Friday that many companies are quick to offer excuses for their struggles. “A lot of businesses want to make excuses now,” he stated. “What I say to business owners, small, medium and large… ‘These are the cards we are dealt. You’re going to have to make difficult decisions.’”

Lemonis emphasized that numerous companies are succeeding in California despite the state’s high costs and regulations. He added, “If the country is going to survive the way we want it to and prosper, we’re going to have to run good businesses, regardless of what state we’re in.”

The comments follow a Chapter 11 bankruptcy filing by San Diego-based Out West Restaurant Group, an Outback Steakhouse franchisee. The company, officially known as Cerca Trova Restaurant Group, is seeking relief from $449 million in debt. It currently operates 61 Outback Steakhouse locations across California, Arizona, Colorado, Nevada, and New Mexico, down from 99 in 2018.

CEO David Goronkin attributed the bankruptcy to declining customer traffic and high operational expenses. California’s minimum wage increased to $19.60 per hour in January, and beef prices have risen by as much as 5% annually since 2022. “By 2026, the pressures on the business had converged,” Goronkin wrote in court documents, noting continued declines in customer traffic and earnings alongside rising costs.

While exempt from the 2024 fast-food minimum wage law, full-service restaurants across California have experienced increased labor costs. Out West is now seeking court approval to sell its assets as part of its restructuring.

Lemonis further explained, “There’s a cause and effect for everything… either I’m going to raise the prices, I’m to cut my staff, I’m gonna have to close — there’s always a cause and effect.”

Bloomin’ Brands, the parent company of Outback Steakhouse, has agreed to purchase the remaining 61 locations for $26.3 million and is providing up to $5.5 million in interest-free financing.