Insights

For Quick Service Restaurants Bankruptcy May Be Tricky

By: Laura Marcero, CIRA

Although Quick Service Restaurants traditionally have enjoyed profitability, the extended US recession, changing consumer habits and spiking commodity prices have taken a toll. Many brands have experienced declining sales, which have led to a precipitous drop in profitability for franchisees. Also, many franchisees are finding themselves in a state of distress. More and more, these franchisees are filing for bankruptcy as a means to reorganize, given the drop in profitability and squeeze on cash flow. Reorganization is a viable option for many franchise operators, but it's not always straightforward. Franchisees are advised to look before they leap.

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