Roti is the latest fast-casual brand to file for Chapter 11 bankruptcy.
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Diving certificate:
- Roti, a fast-casual brand in Illinois, Minnesota and the Washington, DC areahas filed for Chapter 11 bankruptcy protection, according to court documents submitted last week.
- The brand with 19 stores according to a court documentrecorded a decline in unit sales compared to before the pandemic Highest of 42 restaurants to 26 in 2023, according to the brand’s CEO, Justin Seamonds.
- In 2024, a long list of restaurant brands and operators have filed for bankruptcy protection, ranging from industry giants like Red lobster to smaller niche chains such as Sticky finger joint.
Diving insight:
Roti survived the COVID-19 pandemic in part by negotiating rent deferrals with its landlords. Many of the brand’s rent deferral agreements have expired, “resulting in a significant increase in operating expenses that have been difficult to cover,” Seamonds said in the filing.
Due to existing leases, the company faces rental obligations of approximately $350,000 per month or $4.2 million per year, which, according to the statement, represents a significant burden on the company’s liquidity.
Seamonds said an unnamed national restaurant company has been in talks with Roti in recent months to acquire eight of its stores, and said it was possible the company would act as a stalking-horse bidder for those stores.
The real estate costs have helped other restaurants such as Red Lobster, over the edgeAs rent deferrals end and commercial landlords face pressure from their creditors, it may become more difficult for restaurant brands to negotiate real estate costs.
