Filing for bankruptcy doesn't necessarily mean the end for a struggling business. While some fast-food chains managed to make it out alive, others weren't so lucky.
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00:00Filing for bankruptcy doesn't necessarily mean the end for a struggling business.
00:04While some fast food chains managed to make it out alive, others weren't so lucky.
00:08We all know the little ditty about Jack and Diane, those two American kids doing the best they can.
00:13But while the pair was known for sucking on chili dogs outside the Tasty Freeze,
00:18modern diners may only be familiar with this fast food restaurant because of the iconic song.
00:22After all, it's been more than a half-century since Tasty Freeze's heyday,
00:26and nearly 60 years since the restaurant filed for Chapter 11 bankruptcy in 1963.
00:31A precursor for modern fast food chains,
00:34more than 2,000 Tasty Freeze locations could be found at the chain's peak during the early 1960s.
00:39Though the ice cream purveyor didn't fade away after filing for bankruptcy,
00:43it never quite reached the same heights, either. In fact, by 1992, only 340 locations remained
00:49in the U.S., according to the book Fast Food, Roadside Restaurants in the Automobile Age.
00:54As of 2022, only four stand-alone Tasty Freeze locations were still open. Of course,
00:59if you're near a Wienerschnitzel restaurant and are craving some Tasty Freeze soft serve,
01:03you may be in luck, since the hot dog chain's parent company, the Ghilardi Group,
01:07bought Tasty Freeze in 2003. Its classic ice cream is still sold at the vast majority of
01:12Wienerschnitzel locations in 2022, according to its website.
01:16The notion that Del Taco could be considered a legitimate threat to Taco Bell's fast food
01:20Mexican supremacy is patently silly. After all, Taco Bell has more than 7,000 locations in 30
01:26different countries as of 2022. Del Taco, on the other hand, has only 592 U.S.-based locations.
01:33Yet, back in the early 1990s, before the rise of Chipotle or Moe's, among others,
01:38Del Taco did indeed fancy itself a worthy competitor to Taco Bell. In fact, as Los
01:42Angeles Times reports, this was the main catalyst behind its decision to file for bankruptcy in 1993.
01:48By way of Del Taco,
01:50Filing for Chapter 11 bankruptcy wasn't expected to change much at the ground level,
01:54with then-president Kevin K. Moriarty telling the Los Angeles Times,
01:58"...our customers will see no difference in our operations."
02:00Additionally, since its bankruptcy filing was driven by a desire to match the might of Taco
02:05Bell, Del Taco presented a fairly aggressive expansion plan for the remainder of the 90s
02:09at the time. Of course, even in 1993, Del Taco had a mere 175 restaurants,
02:15compared to Taco Bell's 3,700 locations. With that said, it's hard to believe Del Taco's
02:20conviction that it could have ever competed with Taco Bell, with or without the restructuring of
02:24its then-substantial debt load. There was no shortage of restaurants that were forced to
02:28close due to the COVID-19 pandemic. Given this, if we told you the fast food chain Crystal filed
02:33for bankruptcy in 2020, you'd probably assume it did so after the pandemic brought the world
02:38to a stop. But as fate would have it, Crystal actually filed for Chapter 11 bankruptcy in
02:42January 2020, two months before we entered the pandemic. Coming on the heels of 44 restaurant
02:48closures the year prior, Crystal's unfortunately timed decision to file for bankruptcy protection
02:53so soon before the COVID-19 pandemic limited its potential options, according to QSR Magazine.
02:59Still, the fast food company was able to ensure its survival, and the chain was purchased by the
03:04Fortress Investment Group in May 2020. This wasn't the Southeast regional chain's first
03:08tango with bankruptcy court. Crystal had filed for bankruptcy in 1995 as well,
03:12though that clearly didn't spell doom for the company.
03:15Every kid understands the appeal of Chuck E. Cheese, regardless of how often they frequent
03:20the pizza chain. But the innate popularity of the restaurant arcade animatronic band venue
03:24doesn't mean it's been smooth sailing since it first opened in San Jose, California, in 1977.
03:30In fact, as The Washington Post explains, less than a decade into its existence,
03:34the chain was already racked with debt, leading its original parent company,
03:38Pizza Time Theater Inc., to file for Chapter 11 bankruptcy in 1984. After a court ruled it had
03:44to repay $50 million in defaulted bonds, Pizza Time Theater Inc. took the drastic measure of
03:49filing for bankruptcy to avoid corporate destitution. While this helped the chain
03:52avoid going belly-up during the 1980s, it didn't ensure its long-term survival,
03:57particularly in the midst of a once-in-a-lifetime global pandemic.
04:00So, in 2020, shortly after the widespread emergence of COVID-19,
04:05Chuck E. Cheese's parent company, now CEC Entertainment, was forced to file for Chapter
04:0911 bankruptcy again, according to Nation's Restaurants News. This helped the company
04:14shed a massive $705 million debt by December 2020.
04:18"'We should celebrate.'"
04:20"'Yeah, I'll go rent out Chuck E. Cheese.'"
04:22When a company files for bankruptcy, it doesn't immediately free itself of all
04:25prior financial obligations. Just don't tell that to Michael Scott.
04:29"'I declare bankruptcy!"
04:34According to NOLO, a number of arrangements need to be agreed upon, and because of this,
04:39a Chapter 11 bankruptcy generally takes between six months and two years to resolve.
04:43Sometimes, though, the stars align, and a business can emerge fairly quickly on the other side,
04:48as was the case when fast food chain Rubio's Coastal Grill filed for Chapter 11 bankruptcy
04:53in October 2020. Upon filing for bankruptcy protection, Rubio's didn't sit idly by.
04:58Rather, the home of the so-called Original Fish Taco went to work immediately. After only two
05:03months, the fast food taco chain had come to an agreement with a lender to deal with its
05:08outstanding debts. According to the San Diego Union-Tribune, the speed and substance of its
05:12post-bankruptcy plan earned the company praise from the presiding bankruptcy judge. Not only that,
05:18but as co-founder Ralph Rubio told the San Diego Union-Tribune in 2020,
05:22"...we are viable financially in a way that we were not before."
05:25Getting noticed as a new face in the fast food donut game may seem impossible,
05:29considering Dunkin' and Krispy Kreme have essentially cornered the market.
05:33The undeniably daunting task didn't stop Bluestar from first selling its gourmet donuts in 2012,
05:38though. And, somewhat surprisingly, that challenge didn't really precipitate the
05:42fast food chain's decision to file for Chapter 11 bankruptcy in October 2020, either.
05:47No, the culprit for Bluestar's bankruptcy filing was an all-too-familiar one in 2022,
05:52the COVID-19 pandemic. Like many other restaurants,
05:55Bluestar's business was devastated by the initial pandemic period. As Restaurant Business Online
06:00reports, the impact was so detrimental that, in its Chapter 11 bankruptcy filing from August 2020,
06:05the donut chain declared its intention to shift its business model towards a, quote,
06:09"...wholesale and e-commerce delivery operation in the future."
06:13Eventually, Bluestar was able to secure the financial help required to emerge somewhat
06:17intact from its bankruptcy, though it was hardly unscathed. After all, only three stores remained
06:22open as of March 2022, down from 11 locations in 2019 before the pandemic began, according to The
06:29Oregonian. According to CNBC, 60 percent of restaurants shut down after less than a year.
06:35But even if an establishment survives the first year, there's still no guarantee of
06:39long-term security. Pioneer chicken founder H.R. Kaufman found this out firsthand in the
06:44decades following the fried chicken chain's opening in 1961. While the company had grown
06:48to 300 locations by 1988, Los Angeles Times reports that it couldn't avoid filing for
06:53Chapter 11 bankruptcy that same year. Now, as we noted earlier, filing for Chapter 11 bankruptcy
06:58provides a company the opportunity to reorganize its debt load so it can remain in business.
07:03However, Pioneer Chicken found itself filing for Chapter 11 bankruptcy again in 1991.
07:08Unfortunately, the second Pioneer Chicken bankruptcy did little to stem the corporate
07:13bleeding. United Press International explains that in 1993, all 82 remaining locations were
07:18converted to Popeyes, essentially signaling the end for the once-prominent California-based fast
07:23food chain. Winkies, a former Pennsylvania-based fast food chain, sadly has no connection to the
07:29Winky Dinky Dog that was featured in the 1987 satire Hollywood Shuffle. It's probably better
07:34for the filmmakers, frankly, since Winkies had been out of business since 1985, only three years
07:40removed from filing for Chapter 11 bankruptcy in 1982.
07:43"'I know, I know, and I'm glad to be working here at Winky Dinky Dog!'
07:46"'Yeah!'
07:46Winkies certainly had a good run upon first opening in 1962,
07:50but rising competition from nationwide fast food chains throughout the 1970s
07:55squeezed the regional burger joint into submission, according to the Pittsburgh Press.
07:59And while a bankruptcy judge approved the fast food company's refinancing plan in 1983,
08:04by then, the damage to Winkies' brand — and its bottom line — was likely done.
08:09Some may be unfamiliar with Happy Joe's Pizza, but that doesn't mean it's unworthy of our
08:13consideration, particularly in light of its parent company, Dynamic Restaurant Holdings,
08:18filing for Chapter 11 bankruptcy in September 2022, according to QSR Magazine. Interestingly,
08:24Happy Joe's bankruptcy was exclusive to its parent company and any corporate-owned restaurants,
08:29as the pizza chain's 37 franchised locations were unaffected by the move.
08:33One of the main reasons given by the company when filing for bankruptcy
08:36was less interesting, though — the financial toll taken by 2022's historically high inflation.
08:41Another was, as Franchise Times explains, Happy Joe's now-antiquated restaurant model.
08:46Unfortunately, two Happy Joe's locations were forced to close due to the bankruptcy.
08:51But as Dynamic Restaurant Holdings CEO Tom Sacco told Franchise Times in 2022,
08:56restructuring was the right thing to do for the long-term health of the Happy Joe's brand.
09:00With that said, the future may still be bright overall for the fast food pizza chain.
09:05No fast food chain bankruptcy made us sadder than Chicken George,
09:08which was founded by Black entrepreneur Ted Holmes in 1979. According to The Baltimore Sun,
09:14the company filed for bankruptcy only seven years later. Holmes' vision for Chicken George,
09:18which was named after a character from the landmark miniseries Roots,
09:22was successful enough to make it one of the largest minority-owned businesses in the U.S.
09:26for a time, according to The Washington Post. But the fast food chain's popularity wasn't
09:31enough to stave off financial issues, with nearly $1.4 million owed to both creditors
09:36and the IRS by 1986. It was forced to file for bankruptcy that year.
09:40California State University Northridge reports that by 1991,
09:44several years after Holmes had to sell his company, Chicken George had closed all locations.
09:49But as Holmes' profile from the August 1983 edition of Ebony proved,
09:53he was a worthy role model for aspiring young entrepreneurs.
09:56Of all the fast food chains we've discussed, the most unusual entry has to be Horn & Hardart,
10:01AutoMAD. After all, according to Britannica, Horn & Hardart was essentially a chain of
10:06self-serve cafeterias located in New York City and Philadelphia, not exactly what modern diners
10:11consider fast food. Then again, that industry didn't really exist when Horn & Hardart first
10:16opened in 1888. But fast food was around by the time the company filed for Chapter 11 bankruptcy
10:21for a second time in 10 years in September 1981, according to United Press International.
10:26In some ways, it's not entirely unreasonable to describe Horn & Hardart as one of the first fast
10:31food chains. After all, the grab-and-go concept of Horn & Hardart means its description as one
10:36of the original fast foods, according to the Philadelphia Tribune, is fairly legitimate.
10:41Still, faced with stiff competition from an exponentially growing fast food market,
10:45the pair of bankruptcies in the 70s and 80s proved too much for Horn & Hardart to overcome.
10:50And by 1991, the once-thriving fast food chain had closed for good.