Fast Food Franchisee Bankruptcies Portend Industrywide Struggles

Jonathan Shenson, a Partner in the firm's Bankruptcy, Reorganization, & Capital Recovery Group, recently shared his insights with Bloomberg Law regarding how fast-food franchisees in the US are facing bankruptcy due to declining sales, rising labor and food costs, and increased competition from third-party delivery services, indicating broader challenges facing the industry.

Excerpts:

The number of franchisees filing bankruptcy is still relatively low. But inflationary pressures and other macroeconomic factors make this a “uniquely distressed area” that isn’t confined to just one or two chains, said bankruptcy attorney Jonathan Shenson of Greenberg Glusker Fields Claman & Machtinger LLP.

“The takeaway is that food costs, labor costs really are impacting the bottom line,” he said.

Resources

• Bloomberg Law