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Bravo Brio Eating places LLC, the guardian of Bravo! Italian Kitchen and Brio Italian Grille, filed for Chapter 11 chapter safety for the second time in 5 years, citing the “acute financial distress” going through the business.
The corporate filed within the U.S. Chapter Court docket for the Center District of Florida on Aug. 18, aiming to restructure its debt, streamline and cut back operational bills, shed underperforming leases, shut underperforming areas and appeal to a brand new investor.
Previous to submitting for chapter safety, the corporate closed seven areas. In complete, there are 48 areas working throughout the nation beneath each manufacturers with about 4,000 staff. Forty-seven areas are leased.
Within the submitting, the corporate mentioned that whereas the rapid impression of COVID-19 subsided, the nation subsequently confronted “rampant inflation and a sharp doubling of interest rates.”
Bravo Brio Eating places cited excessive inflation and rates of interest as causes for its monetary struggles. (Getty / Getty Photos)
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These pressures hindered client spending throughout industries, though the corporate mentioned the informal dining-in restaurant sector was “hit especially hard.”
“Restaurants, particularly legacy casual dining restaurants brands, were disproportionately affected because they operate on thin margins, rely heavily on discretionary consumer spending, and face higher sensitivity to increases in food, labor, and occupancy costs,” the corporate mentioned within the submitting, including that rising costs discourage clients from eating out whereas greater rates of interest elevated financing prices.
Bravo mentioned these had been the very the explanation why there have been a number of Chapter 11 filings amongst legacy manufacturers together with Pink Lobster, Tijuana Flats, Fridays and Hooters.
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Chapter lawyer Daniel Gielchinsky projected in February {that a} rising variety of main restaurant chains will probably proceed to file for chapter safety over the approaching years.
A number of components led to their downfall, in keeping with Gielchinsky, founder and companion of South Florida-based DGIM Legislation.
The corporate closed seven areas earlier than submitting for Chapter 11 chapter safety on Aug. 18. (Alamy / Alamy)
Nevertheless, the COVID-19 pandemic was the catalyst, because the business noticed visitors decline considerably. Operators needed to maintain their doorways open, so that they needed to cowl prices like hire, insurance coverage and payroll, although clients weren’t coming in. To remain afloat, eating places relied on authorities subsidies but in addition on taking out loans to fund enterprise bills. This meant that corporations collected debt that they needed to pay again over time plus curiosity.
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The issue, nonetheless, is that the business anticipated client spending at eating places to return to pre-pandemic ranges as soon as issues returned to regular. When that didn’t occur, debt-ridden eating places had been unable to repay these loans, in keeping with Gielchinsky.
The COVID-19 pandemic and excessive inflation brought on hardship for a lot of eating places within the U.S. (Getty / Getty Photos)
High-line income by no means rebounded, in keeping with Gielchinsky, who mentioned that “customers never came back in full force” as a consequence of modifications of their habits and spending capability.
