Restaurant Carnage Spreads As Two More Major Operators Go Bankrupt

Two more major restaurant franchise operators have filed for Chapter 11 bankruptcy protection, adding to a growing list of companies struggling to survive mounting debt, rising operating costs, and financially squeezed consumers.

EYM Diner, a 30-unit Denny’s franchise operator, filed for bankruptcy on November 4, reporting between $10 million and $50 million in liabilities, according to Nation’s Restaurant News. In addition to the Denny’s franchise operator, Schlotzsky’s franchise operator has also sought Chapter 11 protection, according to TheStreet.

The operator, JPrieto Hospitality, previously ran 10 locations of the sandwich chain but has since seen its footprint shrink. The Texas-based company approximately $532,000 in assets against $350,000 in liabilities. Its annual revenue fell from $8.26 million in 2024 to $8.19 million in 2025, while revenue through November 5 totaled just $4.11 million, TheStreet reports.

However, the carnage extends far beyond breakfast diners and sandwich shops.

Wendy’s franchisee Meritage Hospitality Group filed for bankruptcy in September, after operating 314 restaurants across 15 states. The company had already closed 60 underperforming locations, with dozens more potentially facing the chopping block.

Then came Outback Steakhouse franchisee Out West Restaurant Group, which filed for bankruptcy earlier this week, bringing 61 restaurants into restructuring proceedings. Its debt had ballooned to approximately $449 million.

“Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise,” CEO David Goronkin said, according to court filings.