Out West Restaurant Group Files Chapter 11 with $449 Million Debt, Bloomin' Brands Bids $26.3 Million
A major Outback franchisee entered bankruptcy with debt nearly doubled since 2020 due to traffic declines and wage pressures concentrated in California. Bloomin' Brands has moved to acquire the locations at a fraction of reported liabilities. The filing mirrors recent distress at another large franchise operator, indicating sector-wide margin compression rather than isolated mismanagement.
The filing follows sustained revenue pressure and cost escalation. CEO David Goronkin cited falling guest traffic, rising food and labor expenses, and a 35 percent revenue drop during the pandemic. More than half the workforce operates in California, where minimum wage increases have compressed margins. Court documents record the debt expansion without corresponding asset growth.
A parallel filing by Meritage Hospitality Group, Wendy's largest franchisee, occurred weeks earlier after reporting $31.5 million losses in 2025 and $23.1 million in the first half of 2026. Both cases show franchise operators absorbing input inflation and discounting without pricing power. Bloomin' Brands has offered $26.3 million for the assets plus $5.5 million in debtor-in-possession financing, framing the event as isolated.
The transaction structure reveals the parent company's incentive to regain direct control at a discount while limiting contagion to the brand. Restaurants are to remain open during proceedings. Primary records show no coordinated industry response beyond individual creditor negotiations.
Next steps hinge on court approval of the stalking-horse bid and any competing offers within standard 60-day exclusivity periods.
Sources (3)
- [1]Delaware Bankruptcy Court Filing(https://www.deb.uscourts.gov)
- [2]Los Angeles Times Reporting on Debt Figures(https://www.latimes.com)
- [3]Bloomin' Brands Statement on Asset Purchase(https://www.bloominbrands.com)