Companies urged to adapt as restaurant franchisee files for bankruptcy: 'Businesses want to make excuses'
Marcus Lemonis says firms must pivot and make tough decisions after a major Outback Steakhouse franchisee files for Chapter 11
When you tell business owners you're going to change things for them, they're forced to change, too: Marcus Lemonis
Entrepreneur Marcus Lemonis discusses voters' feelings about their finances and taxing millionaires following the midterm elections on 'Fox & Friends.'
Companies operating in California and across the nation face growing pressure to adapt to high overhead and point to local economic conditions as the reason for financial collapse, experts say.
"A lot of businesses want to make excuses now," entrepreneur and FOX Business contributor Marcus Lemonis said Friday during an appearance on "Fox & Friends."
"What I say to business owners, small, medium and large. … ‘These are the cards we are dealt. You’re going to have to make difficult decisions.'"
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Lemonis noted that many companies continue to thrive in the Golden State despite high costs and strict oversight.
"If the country is going to survive the way we want it to and prosper, we're going to have to run good businesses, regardless of what state we're in," he added.
An Outback Steakhouse franchisee with 61 restaurants is filing for Chapter 11 bankruptcy amid piling debt, citing soaring labor costs and inflation in California. (Joshua Lott/Bloomberg via Getty Images, File / Getty Images)
Lemonis' remarks were in response to a question about San Diego–based Out West Restaurant Group, an Outback Steakhouse franchisee that filed for Chapter 11 bankruptcy protection while pointing to California’s labor expenses and inflation as the primary catalyst for its distress.
Out West, officially known as Cerca Trova Restaurant Group, is seeking relief from a massive $449 million debt load. The company operates 61 Outback Steakhouse locations across California, Arizona, Colorado, Nevada and New Mexico, a decline from the 99 restaurants it managed at its peak in 2018.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BLMN | BLOOMIN' BRANDS INC. | 9.75 | -0.72 | -6.88% |
In court filings, CEO David Goronkin blamed a shrinking customer base and high operational overhead. California’s minimum wage hit $19.60 per hour in January. The filing also cited beef price increases of up to 5% annually since 2022.
"By 2026, the pressures on the business had converged," Goronkin stated in court documents. "Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise."
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Out West, officially known as Cerca Trova Restaurant Group, is seeking relief from a massive $449 million debt load. (Victor J. Blue/Bloomberg via Getty Images, File / Getty Images)
While sit-down restaurant chains were exempt from California's $20-per-hour fast-food minimum wage law passed in 2024, full-service restaurants have faced higher labor costs statewide.
To navigate its Chapter 11 restructuring, Out West is seeking court authorization to sell its assets.
"There's a cause and effect for everything," Lemonis said. "Either I'm going to raise the prices, I'm going to cut my staff (or) I'm gonna have to close. There's always a cause and effect, and I think what these DSA candidates are gonna realize quickly is the effect is going to actually impact the people that voted for them."
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Parent company Bloomin' Brands, which owns several restaurant chains, has agreed to purchase the remaining 61 Outback locations for $26.3 million.
The Florida-based parent company is also providing up to $5.5 million in interest-free debtor-in-possession financing.
FOX Business' Bradford Betz contributed to this report.