Fast-casual restaurant chain bankruptcies are piling up in 2024. Roti is the latest

Roti, a fast-casual restaurant chain known for its Mediterranean cuisine, has filed for Chapter 11 bankruptcy protection, the company said on Friday.

“Our vision to create happier, healthier, and more flavorful lives comes to life by providing our guests with exceptional food experiences—even in the face of current headwinds,” said Justin Seamonds, Roti’s CEO and “prime minister of fun,” in a statement. “After careful consideration, filing for bankruptcy protection was the best way to address our challenges—including financial performance, rising costs, mixed location performance, and tough market conditions—while staying open and focused on delivering Food For A Full Life to each and every guest.”

Restaurant bankruptcies abound this year

Roti’s filing reflects a troubling trend in the restaurant industry. Fast-casual or family-style chains including Red Lobster, Tijuana Flats, and Buca di Beppo have all sought bankruptcy protection in 2024, with BurgerFi hinting earlier this month that it may follow suit.

Key factors contributing to this trend include underperformance, financial pressures from inflation, and the need for strategic realignments.

Private equity and mismanagement have also been cited in some instances, such as in the case of Red Lobster, which was saddled with debt and other problems after it was purchased by Golden Gate Capital in 2014.

Another major issue is the exodus of office workers from downtown business districts, which has significantly reduced foot traffic in city centers. The COVID-19 pandemic had already impacted Roti heavily, as 50% of its locations were in these high-traffic areas. Despite overcoming these challenges with support from investors and customers, the current economic climate remains difficult.

At the same time, other fast-casual brands in the space continue to thrive—notably, Chipotle Mexican Grill, whose CEO was recently poached by Starbucks, and Cava Group, which last week said its traffic had increased almost 10% during the second quarter.

What’s next for Roti?

Founded in 2006 in Chicago, Roti says it pioneered the introduction of eastern Mediterranean cuisine to the fast-casual dining scene. The company plans to use the bankruptcy filing to seek new investors or buyers while reorganizing its finances.

The good news is, Roti will continue to operate its locations in Chicago, Minneapolis, and the Washington, D.C., metro area, maintaining its full menu, catering services, and loyalty programs.

As Roti navigates this restructuring process, it says it will work with landlords and suppliers to keep its locations open and employees engaged.