The post-pandemic era has been brutal in the retail a restaurant sectors. Once a fast-growing restaurant chain, World of Beer Bar & Kitchen has filed for Chapter 11 bankruptcy protection.
The Tampa-based company’s fall from grace is dire.
Ben Novello, CEO of World of Beer, explained in a statement: “The operating environment for restaurants has become increasingly challenging. We’ve had to make difficult decisions to ensure the long-term viability of our business.”
World of Beer’s story began promisingly in 2007, riding the wave of the craft beer boom.
By 2013, it had become one of the top 10 fastest-growing chains in the U.S., with system sales of $56 million. This growth continued, reaching $85.5 million by 2018.
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However, the company’s expansion came with its own set of problems.
Court documents reveal that many franchisees lacked industry experience, treating their franchises as “passive/secondary” businesses.
World of Beer Bar and Kitchen declares bankruptcy.
The Tampa-based company has $25.6 million in secured debt with Synovus Bank and has closed 14 locations over the past year, leaving the chain with 33 restaurants. pic.twitter.com/CpsFAhHOUg
— Kat B (@dedkatbouns) August 5, 2024
This led to operational issues and legal battles, costing the company “millions of dollars in lost royalties and legal fees.”
The COVID-19 pandemic dealt another blow to World of Beer.
About 15% of its locations never reopened after pandemic-related closures.
In an attempt to weather the storm, the company borrowed $8 million through the Main Street Lending Program in mid-2020 to open three new locations.
Unfortunately, these new ventures struggled in the challenging operating environment and have since closed.
Currently, World of Beer is facing $25.6 million in secured debt owed to Synovus Bank.
Over the past year, the chain has closed 14 locations, leaving it with 33 restaurants, primarily in the Southeast.
Just over half of these remaining locations are franchisee-owned.
The company’s struggles are not unique in the current restaurant landscape.
Many chains are facing similar challenges, with some forced to file for bankruptcy or coming close to it. Red Lobster, Rubio’s, and Tijuana Flats are among those who have recently declared bankruptcy.
These financial difficulties stem from a combination of factors.
Consumer spending on dining out has decreased, while restaurants continue to battle inflation and shrinking profit margins.
The post-pandemic environment has proven particularly harsh for businesses that emerged from lockdowns with weakened finances.
Despite these challenges, World of Beer remains cautiously optimistic about its future.
The company believes its concept is sustainable, particularly after restructuring. It plans to focus on profitable units and may close additional underperforming locations.
