According to court documents, the owners of 57 Burger King Restaurants filed for bankruptcy and accused them of forcing high labor costs and inflation.
Consolidated Burger Holdings, one of Hamburger King’s biggest franchisees, owes nearly $37 million to its creditors and filed for Chapter 11 bankruptcy protection on Monday.
They are trying to sell assets through the court’s supervision process.
The company’s chief restructuring officer, Joseph Luzinski, said the franchisee’s problems have been exacerbated by “recent increase in transportation and food costs, lower availability of labor and inflation.”
The company’s restaurants are located in the Florida Panhandle, which includes nine locations in Tallahassee and southern Georgia.
Over the past few years, several large Burger King franchisees have filed for bankruptcy.
The consolidated Burger Holdings bankruptcy is the result of “the result of significant walking and reduced revenues without rent costs, liabilities or other liabilities being addressed,” Luzinski said in court documents.
The company owes $36.64 million to less than 1,000 creditors after losing several stores, according to bankruptcy documents.
In the most recent fiscal year, the franchisee reported revenue of $67 million and net operating loss of $12.5 million.
It also suffered a loss of $6.3 million in fiscal year 2023.
Burger King sued Integrated Burger Holdings in January 2024, claiming that the franchisee had broken an agreement to effectively remodel and improve the location.
The two companies reached a settlement in September.
“The Burger King System is much stronger today as it focuses on great franchisees who are committed to investing in restaurants and teams over the long term,” a Burger King spokesperson posted in a statement.
“This means that a small number of franchisees who don’t invest in restaurants will escape the system. We’re working quickly to transfer these restaurants to high-performance operators.”
Court documents alleged that the franchisees spent millions on upgrades and modifications across Burger King’s store.
The company has seen several other major Burger King franchisee files due to bankruptcy in the aftermath of the pandemic.
Meridian Restaurants Unlimited, Toms Kings and Premier Kings all filed for bankruptcy in 2023. The three franchisees ran a combination of 378 Burger King locations.
