Denver, Colorado-based casual dining restaurant Romano’s Macaroni Grill has filed for Chapter 11 bankruptcy after closing over three-dozen locations across the country. Romano’s Macaroni Grill bankruptcy follows an industry-wide change in consumer trends, most notably the shift of American Millennials towards quick-serve restaurants.
Romano’s Macaroni Grill Bankruptcy Follows 37 Location Closings
America’s restaurant industry is undergoing an evolutionary phase, in the midst of which countless casual dining restaurants are going extinct. Romano’s Macaroni Grill has become the latest victim of this industry-wide disruption.
The casual dining restaurant chain has filed for Chapter 11 bankruptcy amid growing financial pressures. Romano’s Macaroni Grill bankruptcy is preceded by mass closures of its restaurant locations across the country.
Romano’s Macaroni Grill closed 37 locations in total during 2017, accounting for about one-third of its total company-owned and franchised locations.
Apparently, the restaurant closures weren’t enough to protect the company’s bottom line from further slipping into the red zone. Romano’s Macaroni Grill has been losing money and, all this while, racking up a massive debt load. In the bankruptcy filing, the restaurant chain lists its liabilities between $50.0 million and $100.0 million.
The restaurant chain was acquired by an Arizona-based investment firm two years ago, from Ignite Restaurant Group. Ignite is the same restaurant holding company which has also separately filed for bankruptcy earlier this year.
Ignite Restaurant Group, which owns famous seafood chain Joe’s Crab Shack, and sports bar chain Brick House Tavern + Tap, filed for Chapter 11 bankruptcy in June. Similar circumstances paved way for Ignite’s bankruptcy as Romano’s Macaroni Grill bankruptcy.
Ignite Group also faced declining sales and mounting debt before filing for bankruptcy. The group’s restaurant chains have been facing stiff competition from the established quick-serve fast-food chains like McDonald’s Corporation (NYSE:MCD) and trendier restaurants offering healthy food options like Chipotle Mexican Grill, Inc (NYSE:CMG).
Romano’s Macaroni Grill Bankruptcy Partly Owed to Millennials
The decline in the restaurant industry, mostly across the casual dining category, is partly owed to the American Millennials. The young Millennials, most of whom typically earn less than the older generations, are directing their disposable income towards cheaper food alternatives. They either prefer to cook at home or eat out at quick-serve restaurants.
Their food preferences are also driven, in part, by social media trends. Instagram– and Snapchat-worthy photogenic hipster foods are generating demand among the American youth, even if they are slightly more expensive.
These evolving consumer tastes are disrupting the business of countless traditional casual dining restaurants, most of which have been around for decades.
The mass closures of its restaurants following Romano’s Macaroni Grill bankruptcy are some of the many restaurant closures we have reported this year. Many popular local restaurants have been forced to permanently close their doors amid declining sales. Amongst these casual dining restaurant closures have been famous names like Applebee’s, IHOP, and Buffalo Wild Wings, in addition to the previously mentioned Joe’s Crab Shack and Brick House Tavern + Tap.
We reported of over 160 Applebee’s and IHOP restaurants set to close this year. Likewise, Ignite Restaurant Group announced dozens of closures prior to and then after its bankruptcy.
The biggest losers through these bankruptcies and closures have been the employees of the restaurant industry. Thousands have lost their jobs amid the industry-wide closures this year, and many more are likely to follow as these closures continue.
Romano’s Macaroni Grill bankruptcy likewise sparks fears of possible layoffs. The restaurant currently employs about 4,600 employees, whose futures remain uncertain as the odds of additional store closures remain high through the restaurant’s ongoing bankruptcy proceedings.
“Macaroni Grill plans to stay open after bankruptcy,” MLive Media Group, October 28, 2017.