A major Outback Steakhouse franchisee serving the western United States has officially filed for Chapter 11 bankruptcy protection following a wave of recent restaurant closures. Cerca Trova Restaurant Group Holdings, known commercially as Out West Restaurant Group, submitted its filing in Delaware on November 2, placing its remaining 61 locations on the market. The move comes after a difficult stretch for the independent operator, which shuttered ten locations across Arizona, California, Colorado, and Nevada just last month due to mounting losses and insufficient revenue.
The group’s descent into insolvency was not an overnight occurrence but rather the result of a long period of instability beginning around 2018. According to court documents, the business struggled with dwindling foot traffic that was severely exacerbated by the pandemic, leading to a massive revenue drop in 2020. These struggles were compounded by skyrocketing operational costs, specifically regarding food prices and rising minimum wages in California, where the majority of their workforce is based. By the time of the filing, company debts had ballooned to roughly 449 million dollars.
In an effort to stabilize the situation and keep kitchens open, Bloomin Brands, the parent company of Outback Steakhouse, has stepped in as a stalking horse bidder with an initial offer of 26.3 million dollars to acquire Out West’s assets. To ensure these restaurants remain functional during the legal process, Bloomin Brands has also agreed to provide up to 5.5 million dollars in emergency financing. While this deal sets a baseline price for the assets, it remains subject to court approval and could be topped by other interested buyers.
It is important to note that while this specific franchisee is struggling, the broader Outback Steakhouse brand remains intact and has not filed for bankruptcy itself. If Bloomin Brands successfully completes the acquisition of Out West’s portfolio, it would significantly shift its corporate structure by taking direct ownership of more than half of all franchised locations currently operating within the United States. For now, guests visiting those remaining western sites will see little change in daily operations as the sale proceeds through the courts.
The group’s descent into insolvency was not an overnight occurrence but rather the result of a long period of instability beginning around 2018. According to court documents, the business struggled with dwindling foot traffic that was severely exacerbated by the pandemic, leading to a massive revenue drop in 2020. These struggles were compounded by skyrocketing operational costs, specifically regarding food prices and rising minimum wages in California, where the majority of their workforce is based. By the time of the filing, company debts had ballooned to roughly 449 million dollars.
In an effort to stabilize the situation and keep kitchens open, Bloomin Brands, the parent company of Outback Steakhouse, has stepped in as a stalking horse bidder with an initial offer of 26.3 million dollars to acquire Out West’s assets. To ensure these restaurants remain functional during the legal process, Bloomin Brands has also agreed to provide up to 5.5 million dollars in emergency financing. While this deal sets a baseline price for the assets, it remains subject to court approval and could be topped by other interested buyers.
It is important to note that while this specific franchisee is struggling, the broader Outback Steakhouse brand remains intact and has not filed for bankruptcy itself. If Bloomin Brands successfully completes the acquisition of Out West’s portfolio, it would significantly shift its corporate structure by taking direct ownership of more than half of all franchised locations currently operating within the United States. For now, guests visiting those remaining western sites will see little change in daily operations as the sale proceeds through the courts.
