A major franchisee of Outback Steakhouse has filed for Chapter 11 bankruptcy protection, citing financial strain from rising labor and food costs. Cerca Trova Restaurant Group, which operates 61 Outback Steakhouse locations across California, Arizona, Colorado, Nevada, and New Mexico, initiated the bankruptcy process in the U.S. Bankruptcy Court in Wilmington, Delaware, on Monday.
The company’s debt has grown from $269 million in late 2020 to $449 million this year, according to court documents. Cerca Trova attributed its financial challenges to declining customer traffic, elevated food costs, and increased labor expenses, particularly in California where more than half of its employees work. The filing listed hundreds of millions in debt and sought relief under Chapter 11 to restructure obligations.
California’s minimum wage increase has been a significant factor in the company’s struggles. As of January 1, 2024, California’s minimum wage stands at $16.90 per hour, with fast-food employers required to pay $20 per hour. Outback Steakhouse is not classified as a fast-food establishment under the law, meaning its labor costs are not subject to the higher fast-food wage requirement. However, the company stated that California’s broader minimum wage hike has contributed to its financial pressures.
Cerca Trova’s Chief Executive David Goronkin noted in a court filing that by 2026, the convergence of declining guest traffic, rising costs, and economic pressures made restructuring necessary. The company’s operations have been impacted since the COVID-19 pandemic, with continued challenges in maintaining profitability.
The bankruptcy filing does not immediately indicate the closure of any locations, though the parent company Bloomin’ Brands is now positioned to acquire the franchisee’s assets. Court records indicate the group’s assets and liabilities range between $10 million and $50 million, with 30 creditors listed in the filing.
Outback Steakhouse, an Australian-themed restaurant chain, has not yet publicly commented on the bankruptcy filing. The company’s corporate office did not respond to requests for comment as of publication.