Fast Food Chains That Filed For Bankruptcy

Filing for bankruptcy doesn't necessarily mean the end for a struggling business. While some fast food chains managed to make it out alive, others weren't so lucky. We all know the little ditty about Jack and Diane, those two American kids doing the best they can. But while the pair was known for sucking on chili dogs outside the Tasty Freeze, modern diners may only be familiar with this fast food restaurant because of the iconic song. After all, it's been more than 1/2 century since Tasty Freeze's heyday and nearly 60 years since the restaurant filed for Chapter 11 in bankruptcy in 1963. A precursor for modern fast food chains, more than 2000 Tasty Freeze locations could be found at the chains peak during the early 1960s. Though the ice cream purveyor didn't fade away after filing for bankruptcy, it never quite reached the same heights either. In fact, by 1992, only 340 locations remained in the US, according to the book Fast Food Roadside Restaurants in the Automobile Age. As of 2022, only four stand alone Tasty Freeze locations were still open. Of course, if you're near a week Wiener Schnitzel restaurant and are craving some tasty free soft serve, you may be in luck. Since the hot dog chains parent company, the Gallardi Group, bought Tasty Freeze in 2003, its classic ice cream is still sold at the vast majority of Wienerschnitzel locations in 2022, according to its website. The notion that Del Taco could be considered a legitimate threat to Taco Bell's fast food Mexican supremacy is patently silly. After all, Taco Bell has more than 7000 locations in 30 different countries as of 2022. Del Taco, on the other hand, has only 592 US based locations. Yet back in the early 1990s, before the rise of Chipotle or Moe's among others, Del Taco did indeed fancy itself a worthy competitor to Taco Bell. In fact, as Los Angeles Times reports, this was the main catalyst behind its decision to file for bankruptcy in 1993 by way of Del Taco. Filing for Chapter 11 bankruptcy wasn't expected to change much at the ground level, with then president Kevin K Moriarty telling the Los Angeles Times Our customers will see no difference in our operations. Additionally, since its bankruptcy filing was driven by a desire to match the might of Taco Bell, Del Taco presented a fairly aggressive expansion plan for the remainder of the 90s. At the time, of course, even in 1993, Del Taco had a mere 175 restaurants compared to Taco Bell's 37, 100 locations. With that said, it's hard to believe Del Taco's conviction that it could have ever competed with Taco Bell, with or without the restructuring of its then substantial debt load. There was no shortage of restaurants that were forced to close due to the COVID-19 pandemic. Given this, if we told you the fast food chain Crystal filed for bankruptcy in 2020, you'd probably assume it did so after the pandemic brought the world to a stop. But as fate would have it, Crystal actually filed for Chapter 11 bankruptcy in January 2022, months before we entered the pandemic. Coming on the heels of 44 restaurant closures the year prior, Crystal's unfortunately time decision to file for bankruptcy protection so soon before the COVID-19 pandemic limited its potential options, according to QSR Magazine. Still, the fast food company was able to ensure its survival, and the chain was purchased by the Fortress Investment Group in May 2020. This wasn't the Southeast regional chain's first tango with bankruptcy court. Crystal had filed for bankruptcy in 1995 as well, though that clearly didn't spell doom for the company. Every kid understands the appeal of Chuck E Cheese, regardless of how often they frequent the pizza chain. But the innate popularity of the restaurant arcade animatronic band venue doesn't mean it's been smooth sailing since it first opened in San Jose, CA in 1977. In fact, as The Washington Post explains, less than a decade into its existence, the chain was already racked with debt, leading its original parent company, Pizza Time Theater, Inc, to file for Chapter 11 bankruptcy in 1984. After a court ruled it had to repay $50 million in default bonds, Pizza Time Theater, Inc took the drastic measure of filing for bankruptcy to avoid corporate destitution. While this helped the chain avoid going belly up during the 1980s, it didn't ensure its long term survival, particularly in the midst of a once in a lifetime global pandemic. So in 2020, shortly after the widespread emergence of COVID-19, Chuck E Cheese's parent company, now CEC Entertainment, was forced to file for Chapter 11 bankruptcy again. According to Nations Restaurants News, this helped the company shut a massive 700 $5,000,000 debt by December 2020. We should celebrate. Yeah, I'll go rent out Chuck E Cheese. When a company files for bankruptcy, it doesn't immediately free itself of all prior financial obligations. Just don't tell that to Michael Scott. I declare bankruptcy. According to Nolo, a number of arrangements need to be agreed upon and because of this, a Chapter 11 bankruptcy generally takes between six months and two years to resolve. Sometimes, though, the stars align and a business can emerge fairly quickly on the other side, as was the case when fast food chain Rubio's Coastal Grill filed for Chapter 11 bankruptcy in October 2020. Upon filing for bankruptcy protection, Rubio's didn't sit idly by. Rather, the home of the so-called original fish Taco went to work immediately. After only two months, the fast food Taco chain had come to an agreement with a lender to deal with its outstanding debts. According to the San Diego Union Tribune. The speed and substance of its post bankruptcy plan earned the company praise from the presiding bankruptcy judge. Not only that, but as Co founder Ralph Rubio told the San Diego Union Tribune in 2020, we are viable financially in a way that we were not before. Getting noticed as a new face in the fast food doughnut game may seem impossible considering Dunkin and Krispy Kreme have essentially cornered the market. The undeniably daunting task didn't stop Blue Star from first selling its gourmet doughnuts in 2012, though. And somewhat surprisingly, that challenge didn't really precipitate the fast food chain's decision to file for Chapter 11 bankruptcy in October 2020 either. No, the culprit for Blue Star's bankruptcy filing was an all too familiar one in 2022, the COVID-19 pandemic. Like many other restaurants, Blue Star's business was devastated by the initial pandemic. As Restaurant Business Online reports, the impact was so detrimental that in its Chapter 11 bankruptcy filing from August 2020, the doughnut chain declared its intention to shift its business model towards a quote wholesale and e-commerce delivery operation in the future. Eventually, Blue Star was able to secure the financial help required to emerge somewhat intact from its bankruptcy, though it was hardly unscathed. After all, only three stores remained open as of March 2022, down from 11 locations in 2019, before the pandemic began, according to The Oregonian. According to CNBC, 60% of restaurants shut down after less than a year. But even if an establishment survives the first year, there's still no guarantee of long term security. Pioneer Chicken founder HR Kaufman found this out first hand in the decades following the fried chicken chain's opening in 1961. While the company had grown to 300 locations by 1988, Los Angeles Times reports that it couldn't avoid filing for Chapter 11 bankruptcy that same year. Now, as we noted earlier, filing for Chapter 11 bankruptcy provides a company the opportunity to reorganize its debt load so it can remain in business. However, Pioneer Chicken found itself filing for Chapter 11 bankruptcy again in 1991. Unfortunately, the second Pioneer Chicken bankruptcy did little to stem the corporate bleeding. United Press International explains that in 1993, all 82 remaining locations were converted to Popeyes, essentially signaling the end for the once prominent California-based fast food chain. Winkies, a former Pennsylvania based fast food chain, sadly has no connection to the Winky Dinky dog that was featured in the 1987 satire Hollywood Shuffle. It's probably better for the film makers, frankly, since Winkies had been out of business since 1985, only three years removed from filing for Chapter 11 bankruptcy in 1982. I know, and I'm glad to be working here. Winky Dinky dog Winky certainly had a good run upon first opening in 1962, but rising competition from nationwide fast food chains throughout the 1970s squeezed the regional burger joint into submission, according to the Pittsburgh Press. And while the bankruptcy judge approved the fast food companies refinancing plan in 1983, by then the damage to Winky's brand and its bottom line was likely done. Some may be unfamiliar with Happy Joe's Pizza, but that doesn't mean it's unworthy of our consideration, particularly in light of its parent company, Dynamic Restaurant Holdings filing for Chapter 11 bankruptcy in September 2022, according to QSR Magazine. Interestingly, Happy Joe's bankruptcy was exclusive to its parent company and any corporate owned restaurants, as the pizza chain's 37 franchised locations were unaffected by the move. One of the main reasons given by the company when filing for bankruptcy was less interesting, though. The financial toll taken by 2022's historically high inflation. Another was, as Franchise Times explains, Happy Joe's now antiquated restaurant model. Unfortunately, 2 Happy Joe's locations were forced to close due to the bankruptcy. But as Dynamic Restaurant Holdings CEO Tom Sacco told Franchise Times in 2022, restructuring was the right thing to do for the long term health of the Happy Joe's brand. With that said, the future may still be bright overall for the fast food pizza chain. No fast food chain bankruptcy made us sadder than Chicken George, which was founded by black entrepreneur Ted Holmes in 1979, according to the Baltimore Sun. The company filed for bankruptcy only seven years later. Holmes's vision for Chicken George, which was named after a character from the landmark miniseries Roots, was successful enough to make it 1 of the largest minority owned businesses in the US for a time, according to the Washington Post. But the fast food chain's popularity wasn't enough to stave off financial issues. With nearly $1.4 million owed to for both creditors and the IRS by 1986, it was forced to file for bankruptcy that year. California State University Northridge reports that by 1991, several years after Holmes had to sell his company, Chicken George had closed all locations. But as Holmes's profile from the August 1983 edition of Ebony Proof, he was a worthy role model for aspiring young entrepreneurs. All the fast food chains we've discussed, the most unusual entry has to be Horn and Hardart Automat. After all, according to Britannica, Horn and Hardart was essentially a chain of self served cafeterias located in New York City and Philadelphia, not exactly what modern diners consider fast food. Then again, that industry didn't really exist when Horn and Hardart first opened in 1888. But fast food was around by the time the company filed for Chapter 11 bankruptcy for a second time in 10 years in September 1981, according to United Press International. In some ways, it's not entirely unreasonable to describe Horn and Hard Art as one of the first fast food chains. After all, the grab and go concept of Horn and Hard Art means it's description as one of the original fast foods, according to the Philadelphia Tribune, is fairly legitimate. Still faced with stiff competition from an exponentially growing fast food market, the pair of bankruptcies in the 70s and 80s proved too much for Horn and Hard Art to overcome, and by 1991 the once thriving fast food chain had closed for good.