Cerca Trova Restaurant Group filed for Chapter 11 bankruptcy on Monday, putting 61 Outback Steakhouse locations under court protection as the company said food, labor and traffic pressures had strained its business. The filing covers a franchise system that is concentrated in California and reaches Arizona, Colorado, Nevada and New Mexico.
Chief Executive David Goronkin said in a court filing: “By 2026, the pressures on the business had converged,” Cerca Trova Chief Executive David Goronkin said in a court filing. “Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.” The company said its debt rose from $269 million in late 2020 to $449 million this year.
California labor costs
Cerca Trova said California’s minimum wage laws made labor especially pricey for a majority of its restaurants, and more than half of its employees work in California. The state’s minimum wage reached $16.90 per hour at the start of this year, while fast-food employers there must pay $20 per hour. Outback Steakhouse is not classified as a fast-food establishment under California law.
The company said it had been struggling since the COVID-19 pandemic. It also said the cost of beef has been rising by as much as 5% each year since 2022, adding another cost pressure on a chain already dealing with falling traffic and weaker earnings.
Bloomin’ Brands shares
Cerca Trova was once the largest Outback Steakhouse franchisee, with 99 restaurants in 2018. As of June, there were 659 Outback Steakhouse locations nationwide, with 544 owned and operated by Bloomin’ Brands and the rest run by franchisees.
Bloomin’ Brands shares fell Tuesday after the bankruptcy announcement and ended the day at $10.23, down 6.15%. The filing now moves the 61 restaurants into the Chapter 11 process in U.S. Bankruptcy Court in Wilmington, Del., where creditors will sort out how the company handles its debt from here.
