Even before the COVID-19 pandemic shutdown dining rooms five years ago, the casual dining industry was struggling. Many outdated concepts faced declining traffic and demographic shifts as millennials and Gen Z shifted to eating out at fast casual restaurants.
The pandemic forced many casual chains to face a new reality: change or accept certain death. Numerous restaurant brands embraced delivery, pickup and curbside service that led to steady revenue streams. Others have renovated their menus to appeal to younger demographics.
While 2021 and 2022 saw scant bankruptcies as consumers dined out in droves, the restaurant industry faced significant challenges, such as rising labor costs and inflation, in subsequent years.
2023 was a tough year for franchisees, and 2024 saw a resurgence in casual chain bankruptcies from the likes of Red Lobster and TGI Fridays due to rising costs alongside sales and traffic declines triggered by inflation.
Some of the casual brands that emerged from bankruptcy in recent years are facing much brighter futures, with expanded revenue streams, menu updates and an increase in consumer traffic.
Here’s a recap of the five biggest bankruptcies in the last five years, and a look at where these brands are now.
CEC Entertainment
The pandemic was particularly difficult for eatertainment brands like CEC Entertainment and Dave & Buster’s, which rely heavily on dining room traffic. While Dave & Buster’s hung on through various financing moves, CEC Entertainment filed for Chapter 11 in 2020. During the proceedings, the chain closed 45 units and worked with lenders and financial stakeholders to restructure its balance sheet. CEC emerged from bankruptcy in late 2020 with over $100 million in liquidity to help fund operations and growth. It was able to maintain its ownership.
Where the brand is now
Both Chuck E. Cheese and Peter Piper Pizza have undergone various changes since the parent company emerged from bankruptcy. Chuck E. Cheese has been remodeling for several years, redoing nearly 500 units as of 2025, according to Nation’s Restaurant News. The upgrades include trampolines, dance floors and digital ordering kiosks.
Last year, the chain launched a multi-tiered subscription program, called Fun Pass, to target families and offer discounts on food and games at various price points. In 2023, the company expanded its menu to include more adult-friendly options. CEC has been expanding its Peter Piper Pizza brand and has been testing Peter Piper Express, a 1,000-square-foot version of the full-service pizza brand. It currently has only three of these units open, according to its website.
California Pizza Kitchen
Even before the casual pizza chain declared bankruptcy in July 2020, it was among the companies most likely to default, according to a 2019 Moody’s report. California Pizza Kitchen was loaded with debt from its private equity owner Golden Gate Capital, which bought the chain in 2011. The chain attempted to undergo a sale but the pandemic derailed the process. CPK used bankruptcy protections in 2020 to close unprofitable locations and reduce long-term debt. At the time of its Chapter 11 filing, it had 240 locations.
Where the brand is now
2025 is set to be a big year for the chain, which is turning 40-years-old. While it has roughly 40 fewer units than it did prior to bankruptcy, it is on an aggressive growth path that could allow it to exceed its pre-pandemic numbers. In 2021, CPK opened up domestic franchising and began refranchising units in 2023.
CPK will continue to build company-owned locations throughout the U.S. in addition to its international franchising. The brand is expanding further into non-traditional spaces and expects to launch vending machines later this year. It also partnered with Man Vs Fries to offer the virtual brand both in-store and for off-premise. The chain has experienced several quarters of positive sales, traffic and guest satisfaction ratings.
Ruby Tuesday
Ruby Tuesday’s 2020 bankruptcy followed several months of instability, including reports that the chain stopped paying pensions for over 100 employees that summer. The company closed 150 restaurants prior to its bankruptcy. Ruby Tuesday emerged from bankruptcy in February 2021 after it shed various liabilities, including leases from closed locations, allowing it to focus on its core business at over 200 remaining company-owned locations. At the time, the company said it would continue to leverage off-premise channels, including virtual brands.
Where the brand is now
Ruby Tuesday experimented with virtual brands in 2020 and created Libby’s BBQ as a delivery-only brand. It served that brand in-store and for Ruby TueGo and delivery during the summer of 2021. Unlike other casual chains that sunsetted their virtual brands, Ruby Tuesday is still offering Libby’s BBQ, which is available to order through third-party delivery providers. The chain has also leaned heavily on value offers, with options like a Burger Pass, Garden Pass and meal combination deals.
Sizzler
Over 20 years after its first bankruptcy, when it closed 136 company-owned locations, Sizzler faced another Chapter 11 filing in 2020. It had 14 company-owned locations at the time and landlords weren’t willing to negotiate over rent abatements. The bankruptcy, which didn’t impact over 90 franchised locations, allowed the chain to reduce long-term debt and renegotiate leases with landlords.
Where the brand is now
The chain is down to roughly 70 locations. Sizzler has turned to remodels to modernize its brand with new finishes, flooring and wood accents alongside a fireplace, digital menu board and larger booths. The redesign also includes a new salad bar, which will include a beverage bar, cold salads and hot appetizers, like wings. Last year, it updated its menu with new burgers as part of a larger culinary update.
Red Lobster
Red Lobster’s 2024 bankruptcy was several years in the making. In 2014, Golden Gate Capital bought the chain from Darden for over $2.1 billion and then sold the real estate in a sale-leaseback deal for $1.5 billion, adding rental costs that Red Lobster didn’t have to pay previously.
By the time the chain filed for bankruptcy, it had annual rental costs of over $190 million. The chain also underwent back-to-back management changes and came under the ownership of Thai Union Group, which gained a 49% share in the company in 2016. In 2020, Seafood Alliance, an investor led by Thai Union, acquired the remaining stake in the company.
Guest count fell 30% since 2019. Traffic improved slightly in 2020 and 2021 and net sales rose 25% from 2021 to 2023. But net sales slid in the 12 months leading up to Red Lobster’s May 2024 bankruptcy. One of the proximate issues that precipitated the restaurant brand’s bankruptcy was losses it endured in 2023 following its ill-fated Ultimate Endless Shrimp promotion. The chain closed over 100 locations related to its bankruptcy.
Where the brand is now
After emerging from bankruptcy in September with 545 restaurants, Damola Adamolekun became the chain’s CEO. Months into his tenure, the chain has added seven menu items and revived some favorites. The menu now includes a Create your Own Ultimate Feast, allowing guests to mix and match two premium items and two classic items.
The company also trimmed the menu by 20% and is taking a more cautious approach to promotions and limited-time offers. In December, the chain added a happy hour deal with $5 drinks and $2 off some appetizers from 3 p.m. to 6 p.m. for weekday dine-in customers.
TGI Fridays
2024 was a tumultuous year for TGI Fridays. It started the year closing 36 underperforming restaurants. In April, the chain entered an agreement with U.K. franchisee Hostmore where the operator would purchase TGI Fridays for an enterprise value of over $220 million. This deal would have led to Fridays going public on the London Stock Exchange.
By August, the two parties said the deal was delayed following the decision to sell company-owned units and make the combined business fully franchised. That strategy never came to fruition. The acquisition fell through in September after bondholders seized assets from TGI Fridays when the chain failed to meet the requirements of its whole business securitization, a $375 million bond issued in 2017.
Following the termination event, TGI Fridays began closing restaurants, shuttering at least 60 locations between early September and the end of October. In November, the chain declared bankruptcy, blaming the long-term impact of the pandemic and its capital structure. The chain was facing declining sales and weak average unit volumes despite efforts to update its menu and create additional value offerings, such as 10 dishes starting at $9.99 and a happy hour program.
Where the brand is now
Throughout the bankruptcy process, TGI Fridays has been selling off its company-owned locations piecemeal. Yandav Enterprises bought 16 stores for $3 million, while Sugarloaf Hospitality, owned by former TGI Fridays CEO Ray Blanchette, bought three locations for $100,000, according to Restaurant Business. In January, Mera Corp. bought nine locations, including five high-grossing units at the Dallas-Fort Worth International Airport for $34.5 million, according to Restaurant Business.
