Cerca Trova Restaurant Group Holdings, a significant franchisee operating 61 Outback Steakhouse locations across the western United States, filed for Chapter 11 bankruptcy protection in Delaware on November 4, 2026. This Outback Steakhouse bankruptcy filing cites rising food and labor costs, declining customer traffic, and slow recovery from the COVID-19 pandemic.
Key Facts
- Cerca Trova Restaurant Group Holdings, also known as Out West Restaurant Group, filed for Chapter 11 bankruptcy on November 4, 2026.
- The franchisee operates 61 Outback Steakhouse restaurants in California, Arizona, Nevada, Colorado, and New Mexico.
- Bloomin’ Brands, the parent company of Outback Steakhouse, has agreed to purchase Cerca Trova’s assets for approximately $26.3 million, serving as a “stalking-horse” bidder.
- Factors contributing to the bankruptcy include rising beef costs (up 5% annually since 2022), increased labor expenses, and reduced guest traffic.
- Cerca Trova faced class-action lawsuits in California regarding wage and hour violations.
Why Did a Major Outback Steakhouse Franchisee File for Bankruptcy?
A major Outback Steakhouse franchisee, Cerca Trova Restaurant Group Holdings, filed for Chapter 11 bankruptcy due to a combination of financial pressures. These pressures include rising operational costs, reduced customer foot traffic, and the lingering effects of the COVID-19 pandemic on the restaurant industry, according to court filings cited by Bloomberg News and the New York Post
David Goronkin, Chief Executive Officer of Cerca Trova, stated in a court filing, “By 2026, the pressures on the business had converged. Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.” The company’s debt increased from $269 million in late 2020 to $449 million this year. While sales recovered, Cerca Trova struggled with accruing interest on this debt.
What Specific Costs Contributed to the Financial Strain?
Rising food and labor costs significantly impacted Cerca Trova’s financial stability. Beef, the company’s largest expense, saw a 15% to 20% increase in 2022, followed by approximately 5% annual increases since then, according to court documents. This trend mirrors broader challenges affecting the restaurant sector, as discussed in analyses of economic pressures on various industries
Labor costs also played a critical role. Cerca Trova has nearly 3,670 employees, with 31 of its 61 locations in California. The company cited California’s recent increases in local and state minimum wages as a particular challenge. Also, a California court approved a $1.6 million wage-and-hour class action settlement against Cerca Trova this past summer. The franchisee faced accusations of failing to pay overtime and minimum wages, along with not providing meal or rest breaks.
What is Bloomin’ Brands’ Role in the Outback Steakhouse Bankruptcy?
Bloomin’ Brands Inc., the parent company of Outback Steakhouse, is actively involved in the Chapter 11 proceedings. Bloomin’ Brands has entered into an agreement to purchase Cerca Trova’s assets for approximately $26.3 million, subject to adjustments and the assumption of specified liabilities. The company will serve as a “stalking-horse” bidder in the bankruptcy sale process, setting an initial offer that other potential buyers may seek to exceed, as reported by Fox Business
Bloomin’ Brands also agreed to provide up to $5.5 million in interest-free debtor-in-possession financing. This financing aims to support Cerca Trova’s operations during the Chapter 11 proceedings, pending court approval. The proposed acquisition could bring the franchisee-operated restaurants under Bloomin’ Brands’ direct control if the company prevails in the court-supervised sale process.
A Bloomin’ Brands spokesperson clarified that the bankruptcy is “an isolated situation involving the franchisee and does not affect Bloomin’ Brands’ corporate operations, financing, or liquidity.” Bloomin’ Brands also owns other well-known restaurant chains, including Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar.
How Many Outback Steakhouse Locations Are Affected?
The bankruptcy filing directly affects 61 Outback Steakhouse locations operated by Cerca Trova Restaurant Group Holdings. These restaurants are primarily located across western states, including California, Arizona, Nevada, Colorado, and New Mexico. The franchisee intends to continue operating its restaurants throughout the bankruptcy process.
Bloomin’ Brands stated that the filing would have no immediate impact on customers, restaurant employees, or daily operations at the affected Outback Steakhouse locations. This situation highlights the complexities of franchise models, where the financial health of individual franchisees can diverge from that of the parent company. For instance, similar challenges can be seen in other large-scale operations, such as the various Tesla model examples and their production challenges.
What is a “Stalking-Horse” Bidder in Bankruptcy?
A “stalking-horse” bidder is a potential buyer chosen by a bankrupt company to make an initial bid on its assets. This bid sets a floor for the asset’s price, encouraging other potential buyers to submit higher offers. The stalking-horse bid often includes certain protections, such as a breakup fee or expense reimbursement, if another bidder in the end wins the auction.
This process aims to maximize the value of the bankrupt company’s assets for its creditors. In this case, Bloomin’ Brands is acting as the stalking-horse bidder for Cerca Trova’s Outback Steakhouse locations, ensuring a baseline offer for the franchisee’s assets.
| Factor | Impact on Cerca Trova | Details |
|---|---|---|
| Rising Food Costs | Significant increase in operational expenses | Beef costs up 15-20% in 2022, 5% annually since |
| Increased Labor Costs | Higher wages and legal settlements | California minimum wage laws, $1.6M class-action settlement |
| Declining Guest Traffic | Reduced revenue | Slow recovery post-pandemic, changing consumer habits |
| Accruing Debt | Increased financial burden | Debt rose from $269M (2020) to $449M (2026) |
FAQ
What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy is a form of bankruptcy that involves a reorganization of a debtor’s business affairs, debts, and assets. It provides a business with time to restructure its finances and continue operating while working out a plan to repay its creditors.
Will my local Outback Steakhouse close due to this bankruptcy?
Cerca Trova Restaurant Group intends to continue operating its 61 Outback Steakhouse locations throughout the bankruptcy process. Bloomin’ Brands has also stated that the filing will have no immediate impact on customers or daily operations at the affected restaurants.
What is Bloomin’ Brands?
Bloomin’ Brands Inc. is a casual dining restaurant company that owns and operates several well-known brands. These include Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar.
Sources: Fox Business – New York PostUpdated: November 4, 2026.
