Chapter 11 bankruptcy is a kind of bankruptcy that businesses can use to help themselves get out of debt while still maintaining a presence in the market. Chapter 11 bankruptcy gives businesses the chance to restructure debt; they may do that by reaching out to creditors to make new arrangements, changing who they buy from or sell to, or even by closing and reopening or simply closing some extended businesses to bring more income in without spending on failing outlets.
One business that has recently filed for bankruptcy is Logan’s Roadhouse, a chain restaurant known for serving steak. The business is based in Nashville, and it has filed for Chapter 11 bankruptcy with the goal of restructuring it businesses and business plan.
The business intends to close 18 of its restaurants, which are underperforming in their markets. This isn’t new in the restaurant business; it’s been a trend that normal dine-in options are being outsold by fast-paced businesses that serve quickly and cost less but still have sit-down services.
In this case, the company’s revenue has decreased by close to 10 percent by October 2015, and it dropped again by another 4 percent in the first six months of 2016. With a significant drop in the number of customers, the chain determined that it was time to file for bankruptcy and eliminate underperforming restaurants to keep the profitable up and running.
The company also plans to encourage new traffic to the restaurant by updating the customer experience; changing what people expect may help the restaurant update itself and fit in with the new emerging trends.
Source: Knoxville News Sentinel, “Logan’s Roadhouse files Chapter 11 bankruptcy, with plans to close 18 restaurants,” Aug. 31, 2016