Outback Steakhouse Franchisee Files for Chapter 11 Bankruptcy

Out West Restaurant Group, the largest domestic franchisee of Outback Steakhouse locations across the western United States, filed for Chapter 11 bankruptcy protection in Delaware on Monday. The filing lists estimated assets between zero and $50,000 alongside liabilities ranging from $100 million to $500 million.

The restaurant operator, which is affiliated with Cerca Trova Restaurant Group Holdings, manages approximately 60 to 61 Outback Steakhouse restaurants across California, Arizona, Nevada, Colorado, and New Mexico. Cerca Trova CEO David Goronkin pointed to a familiar industry squeeze, stating that guest traffic and earnings continued to decline while food, labor, and other production costs kept rising.

Court filings and related reporting indicate that soaring beef prices and mounting debt significantly contributed to the financial strain. Cerca Trova noted that beef prices spiked roughly 15% to 20% in 2022 and continued climbing by up to 5% annually in subsequent years, while the company's total borrowings swelled to nearly $449 million.

Amid the bankruptcy proceedings, Outback Steakhouse parent company Bloomin' Brands has entered into an agreement to purchase Out West's assets for approximately $26.3 million, subject to adjustments, the assumption of specified liabilities, and bankruptcy court approval. Bloomin' Brands is expected to act as the "stalking-horse" bidder, establishing an initial baseline offer that other potential buyers can seek to exceed.

To support ongoing operations during the Chapter 11 process, Bloomin' Brands also agreed to provide up to $5.5 million in interest-free debtor-in-possession financing. This funding is designed to help cover operating expenses and proceeding costs as the case moves forward under court supervision.

Both corporate and franchisee representatives emphasized that the bankruptcy filing will have no immediate impact on daily restaurant operations, customers, or employees. Out West intends to keep all affected locations open for business while the court-supervised sale and restructuring process unfolds.