Fast-food franchise closes restaurants after Chapter 11 bankruptcy

According to The Street, The fast-food industry is facing intense competition as operators grapple with inflation, rising labor costs, and economic uncertainty. Consumers, worried about their finances and the economy, have been turning to more affordable options, such as eating at home. As a result, fast-food chains are feeling the pinch.

Adding to the challenges, many fast-food chains took on significant debt during the COVID-19 pandemic, exacerbating their current financial difficulties.

Restaurant Brands International (RBI) Hit Hard

Restaurant Brands International (RBI), the parent company of Burger King, Popeyes, and Tim Hortons, has been significantly impacted by these economic pressures. In 2023, three major Burger King franchise operators filed for bankruptcy, leading to the closure of hundreds of stores. Popeyes, another RBI brand, also faced closures, with several franchisees filing for bankruptcy.

In an effort to mitigate the damage, RBI stepped in to purchase one of its largest franchisees.

“Carrols is the largest Burger King franchisee in the United States today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the 12 months ended Sept. 30, 2023,” RBI said in a statement. Carrols also operates 60 Popeyes restaurants across six states.

The decision followed the bankruptcy of large franchisees Premier Kings and Meridian, where several locations were not purchased during auction and were ultimately shut down.

Bojangles Faces Bankruptcy Challenges

Bojangles, while not as large as Burger King or Popeyes, is a beloved fast-food chain with over 800 restaurants in eight states. Known for its Southern-style chicken, biscuits, and tea, Bojangles has built a loyal following since its founding in 1977 in Charlotte, North Carolina.

However, like RBI, Bojangles relies on a franchise model, making the financial health of its operators crucial to the brand’s success. Recently, all of Bojangles’ Maryland locations were shuttered due to the financial issues of a franchisee.

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Financial Struggles of a Bojangles Franchisee

Unlike RBI, Bojangles is a private company owned by Durational Capital Management LP and Jordan Co., meaning it does not disclose financial information to the public. This has made it difficult to gauge the overall financial health of the company, though the closure of its five Maryland locations in 2023 suggests the franchisee’s struggles.

The shuttered locations were operated by Salim Kakakhail and Yavir Akbar Durranni under various LLCs, including ABS Network. According to WUSA9, the franchise owners face a state investigation over allegations of wage theft and fraudulent W2 forms. In November 2023, Durranni and ABS Network filed for bankruptcy in New Jersey.

Legal Issues and Allegations Against Bojangles Franchise Owners

In addition to wage theft allegations, the franchise owners reportedly owe over $69,000 in back property taxes to the state. Employees of the closed Maryland locations have come forward with claims that the restaurants would run out of chicken and resort to purchasing fried chicken from nearby Popeyes and Safeway stores.

Despite the messy situation, Bojangles emphasized that the franchisee is no longer part of its system. “Franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities,” the company stated.

Attempts to reach Kakakhail and Durranni for comment were unsuccessful.