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Major Hardee’s franchise files for bankruptcy, closing 39 restaurants

2023-05-10T18:09:37+00:00
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  • A major Hardee’s franchise makes a drastic decision.
  • The franchise is looking for a buyer for their remaining locations.
  • Summit Restaurant Holdings has closed 39 Hardee’s.

Large companies in the United States continue to be affected by inflation. Now a major Hardee’s franchise is added to the list. Summit Restaurant holdings is filing for bankruptcy and has closed 39 restaurants.

According to Restaurant Business, Summit Restaurant Holdings, which once operated 145 Hardee’s restaurants in several states, filed for bankruptcy on Thursday, May 4 after closing 39 locations.

Hardee’s franchise files for bankruptcy, closing 39 restaurants

Hardee's franchise files for bankruptcy, closing 39 restaurants
PHOTO: Shutterstock

The company, which according to RB has $22 million in secured debt, once operated 145 restaurants in Alabama, Florida, Georgia, South Carolina, Kansas, Missouri and Wyoming. It is part of the large group of companies that also operates Carl’s Jr. restaurants and operates 226 restaurants in 16 states.

Multiple court filings indicate the company currently operates 108 restaurants, though that would leave a discrepancy of at least two restaurants, according to their bankruptcy filing days ago.

Summit Restaurant Holdings hopes to find a buyer for its remaining Hardee’s locations

They plan to use the bankruptcy process to find a buyer
PHOTO: Shutterstock

Summit plans to use the bankruptcy process to find a buyer, according to court documents. The company has an agreement with a «stalking horse» bidder, which provides the first bid in a bankruptcy court auction for the restaurants.

In a statement, Hardee’s parent CKE Restaurants Holdings said the restaurants are expected to be sold to a “well-capitalized, qualified buyer with a track record of success in the restaurant, entertainment, food and beverage and retail markets.”

The pandemic was hard on the restaurant industry

The pandemic turned out to be a 'bad ally'
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Restaurants that remain open are expected to conduct “business as usual” during the sales process. “CKE’s goal is to maintain the maximum number of stores that continue to operate, supported by a sustainable capital structure and poised for long-term growth and success, and we are working with all parties to achieve that goal,” CKE said in its statement.

According to court documents, Summit struggled with decreased traffic during the pandemic and subsequent pressures on rising food and labor costs, which drained the company’s cash flow.

Hardee’s is not the only franchise to file for bankruptcy

It is not the only franchise that announced its bankruptcy
PHOTO: Shutterstock

Many of the 145 restaurants underperformed, with lower unit volumes and profit margins making them more sensitive to rising costs. Some restaurants «were operating at a loss for an extended period of time.»

The company, which defaulted on its debt, hired an investment banker six weeks ago to find a buyer. Several franchisees have filed for bankruptcy this year amid skyrocketing costs, particularly in chains that haven’t recovered as strongly from the pandemic as others. For instance, Burger King filed for bankruptcy earlier this year.

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