The iconic fast-food chain operator files for Chapter 11 bankruptcy

Fast food restaurant chains face several challenges to overcome and stay in business.

Competition between chains, whether burger, pizza or chicken joints, has been fierce for decades. The 2020 Covid-19 pandemic brought new challenges as restaurants had to adapt to a new business model, often closing their dining rooms and switching to all delivery, drive-thru and delivery services that they were likely to they didn’t offer them before.

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As restaurant companies and their franchisees recovered from the difficulties of the pandemic, they faced a new set of challenges with rising inflation, high interest rates, higher labor costs and changing consumer preferences .

Related: Bankrupt pizza chain operator unloads dozens of restaurants

These new challenges have led restaurant chains to file for bankruptcy protection to reorganize their debts in order to continue operating. On some occasions, restaurant owners have been forced to close locations to cut losses.

Fast-food restaurant operator EYM Group operates Burger King, Denny’s, Pizza Hut, Panera Bread and Kentucky Fried Chicken franchises in seven states, including Florida, Georgia, Illinois, Indiana, South Carolina, Texas and Wisconsin.

The company’s affiliate EYM Pizza filed for Chapter 11 protection in July related to a Yum Brands lawsuit (YUM) filed suit against the franchisee regarding its Pizza Hut royalty payments.

While it’s unclear whether the bankruptcy filing and lawsuit affects affiliate EYM Chicken, the company has closed 25 of its 47 KFC locations.

RRG Inc., a 17-location Popeyes franchise operator in Georgia, filed for Chapter 11 bankruptcy in February 2024 as three failed locations decimated all of the operator’s other restaurants.

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“Debtor is filing for bankruptcy as a result of failed locations,” the debtor wrote in the bankruptcy filing. “The Debtor has approximately three Popeye’s restaurants that have significantly lost money and caused a financial burden to the continued operation of the remaining restaurants. The debtor has fallen behind on the rental payments of the remaining profitable restaurants and must cure those arrears to avoid termination of the lease”.

And now, a legendary chain of fried chicken restaurants dating back to the 1950s is facing a Chapter 11 bankruptcy filing.

Iconic fast-food chain franchise operator Original Harold’s Chicken of Nevada filed for Chapter 11 bankruptcy on Oct. 4 to reorganize its business.

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The company, which operates Original Harold’s Chicken locations in North Las Vegas and Henderson, Nev., listed $40,000 in liabilities but no assets in its petition. The debtor did not indicate a specific reason for declaring bankruptcy.

The fast-food chicken franchise indicated that no funds will be available for distribution to unsecured creditors after administrative expenses are paid.

The Original Harold’s Chicken restaurant chain, founded in Chicago in 1950, operates 46 locations in eight states, including Arizona, California, Georgia, Illinois, Indiana, Missouri, Nevada and Texas.

Founder Harold Pierce launched his first restaurant in an African American neighborhood in Chicago on 39th Street out of necessity. Larger fast-food chains avoided such neighborhoods, and legal and social obstacles in the 1950s prevented black-owned businesses from locating in downtown Chicago or the North Side, according to the Original Harold website.

Pierce’s chain of restaurants would soon become one of the few examples of a successful black-owned fast food chain that primarily served the black community. Nearly 75 years later, Harold’s now has 13 locations in Chicago and 46 nationwide.

The Chicago-based fast-food chain has recently had other difficulties with its restaurant locations. A location on East 47th Street in the Windy City in June 2024 was closed by the Illinois Department of Revenue for undisclosed tax reasons.

Harold’s Chicken on 87th Street in Chicago closed for good in July 2020 when it failed to negotiate a new lease after the landlord raised the rent by 40%.

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