Outback Franchisee Seeks Debt Relief Amid Cost Pressures

Cerca Trova Restaurant Group, a San Diego-based operator of 61 Outback Steakhouse locations, filed for Chapter 11 bankruptcy on Monday. The company seeks relief from $449 million in debt, a figure that has grown from $269 million in late 2020. The filing was made in U.S. Bankruptcy Court in Wilmington, Delaware, and cites expensive food and labor costs alongside declining customer traffic.

The franchisee operates restaurants across California, Arizona, Colorado, Nevada, and New Mexico. Court documents indicate that more than half of its employees work in California. The company stated that the state’s minimum wage laws have made labor particularly costly. California’s general minimum wage is $16.90 per hour, effective at the start of this year. Outback is not classified as a fast-food establishment, so the higher $20 per hour rate for fast-food workers does not apply, though the standard rate remains a major expense.

David Goronkin, the company’s chief executive, noted in a court filing that pressures on the business had converged by 2026. He stated that guest traffic and earnings continued to decline while food, labor, and other production costs continued to rise. The company also pointed to rising beef prices, which have increased by as much as 5% annually since 2022. Cerca Trova described the market conditions as difficult and largely unforeseen as it accumulated debt during a period of expansion.

The restaurant industry has faced widespread challenges since the pandemic. Red Lobster filed for bankruptcy in 2024 following the introduction of a $20 all-you-can-eat shrimp deal. More recently, True Food Kitchen, a chain backed by Oprah Winfrey, filed for Chapter 11 bankruptcy and closed 12 locations. Analysts attribute these trends to inflation, economic pressure, and the rise of GLP-1 weight-loss drugs such as Ozempic, which have reduced customer appetites and shifted dining habits toward home cooking or fast food.

Bloomin’ Brands, the parent company of Outback Steakhouse, proposed to purchase Cerca Trova’s assets for $26.3 million. This offer serves as a stalking-horse bid, meaning it will stand unless a higher offer emerges during the bankruptcy process. Elizabeth Daly, a spokesperson for the Tampa, Florida-based parent company, said in an email that the situation is isolated to the franchisee and does not affect Bloomin’ Brands’ corporate operations or liquidity. The company stated it is seeking to support operational continuity and protect the brand.

Cerca Trova was once the largest Outback franchisee, operating 99 restaurants in 2018. As of June, there were 659 Outback locations nationwide, with 544 owned and operated directly by Bloomin’ Brands. The remainder are run by franchisees. Bloomin’ Brands also owns Bonefish Grill, Carrabba’s Italian Grill, and Fleming’s Prime Steakhouse and Wine Bar.

Bloomin’ Brands shares rose 60% since January despite industry pressures. Following the bankruptcy announcement on Tuesday, shares fell 6.15% to end the day at $10.23. The company’s market value stood at nearly $879 million. Cerca Trova, also known as Out West Restaurant Group, could not be reached for immediate comment.