The food-pocolypse continues with Hardee's becoming the latest casualty of the food bankruptcy wars.
We did a video recently on the Burger King bankruptcies and hundreds of stores closing, there have been even more closures since we made the video but Ill post the link above.
The pandemic was tough on a lot of franchises, even McDonalds closed over 400 stores in the last 3 years. The latest big name entering the bankruptcy game is Hardee's.
In case you are wondering opening a Hardee's location will set you back between $1,252,000 to $2,131,000 and the median EBITDAR, which is earnings before interest, taxes, depreciation, amortization, and restructuring or rent is an average of $246,188 over the entire system. But, as we will see today despite some operators making decent money some are going bankrupt.
Summit Restaurant Holdings, one of Hardee's largest franchisees, declared bankruptcy on Thursday. Summit at one point was running 145 restaurants over 8 states but recently shut 39 stores. Summit is part of Capstone restaurant group that runs 225 restaurants in 16 states including Hardee's and Carl's Jr.
Summit owes $22 million to Cadence Bank, plus interest. It also owes $6 million in royalties and advertising payments to CKE Restaurants—which is the parent company of Hardee's and Carl's Jr. It is likely also that back rent is due as well as other amounts to vendors but those amounts we don't know.
According to court documents Summit attributes the bankruptcy to declining foot traffic and revenue without a decrease in rental obligations, debt, and other liabilities. Apparently some of their locations were still turning a profit but the non profitable locations dragged the entire company down.
Before declaring bankruptcy, Summit entered an asset purchase agreement with a stalking horse bidder. If you have never heard of the term stalking horse it is basically the first bid on the assets of a bankrupt company that sets the minimum price for future bidders. Other bidders can now enter but not below the price of the stalking horse.
This bankruptcy follows other big names like Burger King operators Tom's King with 90 units and Meridian with 120 units and multi unit Popeyes operator Premier Kings. Now what you seldom hear about are the single unit operators that sank their life savings into a franchise and went out of business. I took a look at Hardee's disclosure document and they have had net closures of stores over the past three years of 97 stores closing in 2020, 69 closed in 2021 and 11 closed in 2022.
These closures will not be the last we hear of but the positive news is when restaurants go out of business locally it can leave a gap in a region that drives business to the remaining restaurants. And the reality is we are seeing many food franchises that pivoted during the pandemic and are actually doing better today, so it is not all bad news.

Burger King bancruptcies    • Burger King Bankruptcy. Hundreds of S...  

Franchise education playlist    • Call Franchise City Broker Group BEFO...  

Contact Franchise City https://www.franchise.city/our-services

@FranchiseCityOnline