Fast Food Franchisee Bankruptcies Portend Industrywide Struggles

Fast food franchisees are facing post-Covid headwinds that could spur more of them to file bankruptcy in the coming months.

Rising labor and food costs, ballooning interest rates, and corporate brand owners’ demands for upgrades and operational improvements have strained profitability for a number of fast-food chain operators. Many regional banks’ decision to tighten lending practices also have contributed to franchisees’ struggles.

A couple of sizable Burger King franchisees—Meridian Restaurants Unlimited LC and TOMS King Holdings LLC—recently filed for bankruptcy, citing steep business declines.

Premier Cajun Kings LLC, an Alabama-based operator of 19 Popeye’s restaurants, noted in its March bankruptcy ...