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San Diego–based Out West Restaurant Group, the largest Outback Steakhouse franchisee in the U.S., has filed for Chapter 11 bankruptcy protection, blaming rising labor costs, inflation and shrinking customer traffic for pushing the company into distress. The filing, made under the company name Cerca Trova Restaurant Group, says the operator is carrying about $449 million in debt and is seeking court approval to sell assets as part of a restructuring plan.
What the filing says
According to court documents cited in the filing, CEO David Goronkin attributed the company’s decline to a combination of falling guest traffic and increasing costs. “By 2026, the pressures on the business had converged,” Goronkin wrote, adding that “guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.” The filing also noted beef price increases of up to 5% annually since 2022.
At its peak in 2018, the franchisee managed 99 Outback restaurants. The company currently operates 61 locations across California, Arizona, Colorado, Nevada and New Mexico and is seeking relief from its roughly $449 million debt load.
Sale and interim financing
Parent company Bloomin’ Brands has agreed to purchase the remaining 61 Outback locations for $26.3 million and is offering up to $5.5 million in interest-free debtor-in-possession financing to support the Chapter 11 process, according to the report.
Industry commentary and political context
Entrepreneur and Fox Business contributor Marcus Lemonis, speaking on Fox & Friends, said the franchisee’s situation highlights broader pressures facing companies operating in California and elsewhere. He warned business owners they must make difficult decisions when confronted with high overhead and changing local economic conditions. “These are the cards we are dealt. You’re going to have to make difficult decisions,” Lemonis said, adding that business operators can respond by raising prices, cutting staff or closing locations.
Lemonis also noted that many companies still operate successfully in California despite higher costs and oversight. He said, “If the country is going to survive the way we want it to and prosper, we’re going to have to run good businesses, regardless of what state we’re in,” and suggested elected officials who support aggressive labor measures may face the political consequences of those policies.
Labor rules and local costs
The franchisee’s filing points to California’s rising labor costs as a major factor. California’s minimum wage reached $19.60 per hour in January, and while the state’s 2024 fast-food minimum wage law set a $20-per-hour standard for certain quick-service workers, sit-down and full-service restaurants have faced a broader set of higher labor costs statewide.
Out West’s bankruptcy filing and Bloomin’ Brands’ proposed purchase of its assets were first reported by Fox Business. FOX Business’ Bradford Betz contributed to coverage of the story.
