Outback Steakhouse franchisee Cerca Trova files for Chapter 11 bankruptcy

Cerca Trova Restaurant Group, a San Diego-based franchisee of Outback Steakhouse, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Wilmington, Del., on Monday, according to a filing with the Securities and Exchange Commission.

Bankruptcy Details and Financial Status

Cerca Trova, which also operates under the name Out West Restaurant Group, is seeking relief from significant debt. According to court documents, the company's debt increased from $269 million in late 2020 to $449 million this year. One report noted the company had between $100 million and $500 million in liabilities and less than $50,000 in assets.

Cerca Trova Chief Executive David Goronkin stated in a court filing, “By 2026, the pressures on the business had converged,” noting that "Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise."

Proposed Acquisition by Bloomin' Brands

Bloomin' Brands, the parent company of Outback Steakhouse, has entered into an agreement to purchase the assets of the franchisee for approximately $26.3 million, subject to certain adjustments and the assumption of specified liabilities.

Under the agreement, Bloomin' Brands will serve as the "stalking-horse" bidder in the bankruptcy sale process. The company also agreed to provide up to $5.5 million in interest-free debtor-in-possession financing to support Out West's operations during the proceedings, subject to court approval.

Bloomin' Brands spokesperson Elizabeth Daly said in an email, “This is an isolated situation involving the franchisee and does not affect Bloomin’ Brands’ corporate operations, financing, or liquidity,” and added that the company is seeking to "support operational continuity and protect the brand while the court‑supervised process moves forward."

Operational Impact and Market Pressures

Out West Restaurant Group operates 61 Outback Steakhouse locations across the western United States, including California, Arizona, Nevada, Colorado, and New Mexico. More than half of the company's employees work in California.

Cerca Trova cited several factors for the filing, including:

• Rising food and labor costs.
• Declining customer traffic.
• California's minimum wage laws, which the company said have made labor "especially pricey" for a majority of its restaurants.
• Rising beef costs, which Cerca Trova said have increased as much as 5% each year since 2022.

Bloomin' Brands stated the filing would have no immediate impact on customers, restaurant employees, or daily operations at the affected locations. The bankruptcy involves restaurants operated by the franchisee rather than Bloomin' Brands' corporate-owned locations.

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Sources

• foxbusiness.com: Bloomin' Brands moves to buy 61 Outback Steakhouse restaurants after franchisee bankruptcy | Fox Business
• latimes.com: Outback franchisee files for bankruptcy, citing California labor costs - Los Angeles Times
• finance.yahoo.com: Outback Steakhouse restaurant franchisee files for Chapter 11 bankruptcy

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.