The restaurant industry continues to struggle in 2024, as shown by Rōti Modern Mediterranean’s recent Chapter 11 bankruptcy filing.
This Chicago-based chain, known for its Mediterranean-inspired fast-casual dining, joins a growing list of restaurants facing financial troubles this year.
Rōti, founded in 2006, had expanded to 19 locations across three states and Washington, D.C. But like many small chains, it’s been hit hard by recent economic headwinds.
CEO Justin Seamonds explained the company’s decision: “After careful consideration, filing for bankruptcy protection was the best way to address our challenges — including financial performance, higher costs, mixed location performance and tough market conditions.”
The company’s statement highlights the specific hurdles it’s faced: “The COVID pandemic disproportionately affected Roti, as 50% of its restaurants were based in downtown business districts— but Roti made it through with the support of investors and consumers only to find itself in a current restaurant climate mired in a consumer-spending downturn.”
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This spending slump points to broader economic issues affecting American families under the current administration.
With inflation eating into household budgets, many are cutting back on eating out.
🚨U.S. Chapter 11 bankruptcies are SOARING:
– Total filings +34% YoY in first half of 2024
– Small business filings up +61% YoY
– June saw the highest corporate bankruptcies since 2020
Small and mid-sized businesses, especially in consumer discretionary sectors like clothing… pic.twitter.com/lm194RzIuq
— Genevieve Roch-Decter, CFA (@GRDecter) August 12, 2024
Rōti isn’t giving up, though. The company plans to use Chapter 11 to find new investors or buyers while getting its finances in order.
It aims to keep its current locations open and continue offering its full menu, catering, and loyalty programs.
But Rōti’s troubles are just the tip of the iceberg.
The restaurant industry has seen a wave of bankruptcies in 2024.
Larger chains like Red Lobster, Rubio’s and Tijuana Flats have filed for Chapter 11, along with smaller chains such as Tender Greens, World of Beer, and Oberweis Dairy.
Even franchisees aren’t safe, with some Burger King, Subway and Arby’s operators also seeking bankruptcy protection.
These bankruptcies mean real job losses and closed businesses in communities across the country.
They also hurt suppliers, landlords, and local economies that depend on these restaurants.
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The struggles of Rōti and its peers serve as a stark reminder of the real-world impacts of current economic policies.