Debtwired! Restaurant Franchisees Navigating Restructuring Challenges
Jun 27, 2025
Dan Dooley, CEO of MorrisAnderson and an expert in crisis management, shares insights on the tough landscape faced by restaurant franchisees post-COVID. He discusses the pressures of restructuring within beloved burger and pizza brands. Listeners learn about the intricate dynamics of lease negotiations and the challenges in closing underperforming locations. Dooley highlights the mounting financial pressures from rising costs and shifting consumer behavior, providing a candid look at distress signals in the industry.
AI Snips
Chapters
Transcript
Episode notes
Franchisee Bankruptcy Anecdote
- A Burger King franchisee with 150 locations and Hardee's franchisee with 100+ stores faced bankruptcy due to massive earnings drops.
- EBITDA could fall from $20 million to $5 million while debt remains $50-$60 million, making debt servicing impossible.
Sale Process Before Bankruptcy
- Lenders push for sales before bankruptcy to exit loans and set a bidding floor with stalking horse bidders.
- Sale offers usually fall short of debt owed due to declining brand value and profitability.
Lease Costs Rise With Declining Sales
- Declining restaurant revenue increases rent as a percentage of sales, making leases unaffordable.
- Landlords often choose rent reduction over empty units due to re-leasing costs and market conditions.