The Covid pandemic resulted in a massive shutdown of restaurants in March 2020 that led to 1,000s of dining establishments closing permanently.
Most restaurants that survived the pandemic closures and reopened needed to adopt Covid policies and procedures for health safety, which included social distancing.
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The fast-food industry wasn’t hit as hard by the pandemic as the casual restaurant sector, since many chains were already designed with take-out and drive-thru systems that were utilized by restaurants when they reopened after the pandemic subsided.
Related: Popular local Dairy Queen rival files for Chapter 11 bankruptcy
Casual restaurants did their best to offer limited take-out and curbside pick-up systems, but some restaurant concepts, such as buffets, were not designed for such systems, did not adopt them, and many went out of business.
The fast-food sector, however, has faced financial distress since the Covid-19 pandemic subsided. Restaurants have encountered rising labor and food costs driven by inflation, debt payments have significantly risen as interest rates increased, and consumers have re-evaluated their priorities for dining out.
Jack in the Box shuts locations
Popular burger fast-food chain Jack in the Box has felt the impact of a pullback by diners since Covid and in April launched its Jack on Track plan that calls for the closing of 80-120 underperforming restaurant locations by Dec. 31, 2025.
The company said it would eventually close another 70-80 underperforming stores thereafter, based on respective franchise agreement termination dates.
The fast-food chain has already begun the process of closing restaurants, as it in May closed its three remaining Jack in the Box locations in the Kansas City metropolitan area.
Economic problems have forced some fast-food restaurants to file for bankruptcy
Frozen beverage fast-food chain Egees in December 2024 filed for Chapter 11 bankruptcy and closed five of its locations, four in Tucson, and one in Phoenix. The company blamed lingering effects from the Covid-19 pandemic for its financial distress.
Another fast-food restaurant owner, Rita’s Italian Ice franchisee Greene Family Enterprises LLC, which owns a St. Johns, Fla.-based franchise, filed for Chapter 11 bankruptcy protection on June 9, seeking to restructure its debts.
Tropical Smoothie Cafe
Tropical Smoothie Cafe franchisee files for bankruptcy
Finally, Tropical Smoothie Cafe franchisee JND Tropics LLC, filed for Chapter 11 bankruptcy protection, seeking to reorganize its business.
Related: Popular nationwide beauty chain files for Chapter 11 bankruptcy
The Phoenix-based restaurant franchisee filed its Subchapter V petition in the U.S. Bankruptcy Court for the District of Arizona, listing $1 million to $10 million in assets and $1 million to $10 million in liabilities, including debts owed to creditors Applepie Capital, Arizona Department of Revenue, and the Tropical Smoothie Cafe corporation.
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The franchisee indicated in its petition that funds would be available for distribution to unsecured creditors.
The debtor qualified for a streamlined reorganization as a small business debtor with debts under the statutory threshold of $3.424 million.
The franchisee did not indicate a reason for filing for bankruptcy protection.
Tropical Smoothie Cafe, which was established in 1997, offers a variety of smoothies, including Fruit Blends, Super Veggies, Tropical Treats, and Balanced Fusions; several breakfast items, wraps, flatbreads, sandwiches, and salads.
The Atlanta-based smoothie franchise chain has over 1,500 locations in 44 states and Washington, D.C. The chain opened 161 new cafes in 2024, with 70% launched by existing franchisees.
Tropical Smoothie Cafe also signed 247 new franchise agreements last year, according to a January statement.
“This past year proved to be an incredible year for Tropical Smoothie Cafe, and I couldn’t be prouder to be part of this brand,” Tropical Smoothie Cafe CEO Max Wetzel said in a statement.
“Reaching 1,500 cafes open is no small feat, and the remarkable growth driven by the brand is a testament to our entire team and franchise network,” Wetzel said.
Related: Major trucking company files Chapter 11 bankruptcy
