A longtime Arby’s franchisee, Miracle Restaurant Group, recently filed for Chapter 11 bankruptcy due to a combination of factors such as low sales, tax refund delays, and poor acquisition demand. Miracle Restaurant Group, based in Covington, Louisiana, operates 25 Arby’s restaurants across Illinois, Indiana, Texas, Mississippi, and Louisiana. The franchisee had previously filed for bankruptcy in 2010 when it grew to more than 60 restaurants.
The company’s Managing Member, Donald Moore, cited challenges during the coronavirus pandemic as price hikes failed to compensate for increased commodity and labor expenses, leading to a decline in cash flow. Miracle Restaurant Group owes significant amounts to its creditors, including Arby’s and McLane Foodservice.
Despite efforts to sell off restaurants in various locations, negative store performance and declining systemwide sales impacted buyer interest. The franchisee also faced issues with disappointing sales at newer locations and experienced delays in receiving tax refunds from the IRS.
As part of its restructuring plan, Miracle Restaurant Group plans to sell off restaurant locations in Texas, Illinois, and Indiana to address outstanding debt. The company has enlisted the help of Peak Franchise Capital to facilitate the sale of its remaining stores.
Arby’s, part of Inspire Brands, operates over 3,400 locations in the U.S. with systemwide sales reaching $4.76 billion in 2023. The bankruptcy filing from Miracle Restaurant Group is in line with a trend of franchise operators in the fast-food industry, such as Subway, Burger King, CKE, Wendy’s, and Popeyes, filing for bankruptcy due to declining sales, rising costs, and ongoing pandemic challenges.
The challenges faced by Miracle Restaurant Group serve as a reminder of the difficulties that franchise operators in the food industry are currently facing. Despite the setbacks, the company is taking proactive steps to reorganize its business and address its financial obligations. The planned sale of restaurant locations signals a strategic move towards stabilization and eventual recovery.
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