Roti Restaurants was apparently not ready to survive without pandemic-era financial assistance.
The Chicago-based Mediterranean chain filed for bankruptcy late last week, joining a surprisingly robust group of chains taking that step in recent months. In a filing on Monday, the company essentially blamed its challenges on the pandemic.
Roti said that many deferral agreements the company signed with landlords have expired. The company in a post-pandemic environment has had a tough time dealing with the higher rent costs.
“Many of the pandemic-era rent deferral agreements have now expired, leading to a significant increase in operational expenses which have been difficult to meet,” the company said.
Roti operated 42 restaurants going into the pandemic. The company closed about a third of its restaurants that year and was down to 26 by early last year. It also changed its business model, moving from a build-your-own menu of plates, salads, wraps and pitas to a menu of suggested items.
It has closed seven restaurants since then, including three closures in January, according to the filing. It currently operates 19 locations.
That might not be the end of the closures, however.
Roti earlier this year hired an investment banker to market the chain, but the company was unable to reach a deal. But the company said in the filing that it has held negotiations with a “national restaurant company” that is eyeing eight of the chain’s locations.
Roti in a filing said there “remains a possibility” that company will bid to buy those locations.
Roti also hopes other potential purchasers will step forward with an offer.
The filing illustrates the challenges that some restaurant companies still face four years after the pandemic.
The era closed thousands of restaurants around the country. But many companies received financial assistance in one form or another, either through Paycheck Protection Program loans that were later forgiven, or breaks from lenders or landlords.
That assistance is long gone for most companies. But those brands whose sales didn’t recover fully now have to make do without that assistance and some are seeking debt protection, which is one reason for the spike in filings lately. In addition, costs have increased for labor, food, insurance and other things.
Seventeen restaurant chains have filed for bankruptcy this year. Others are close. And many chains have undergone out-of-court restructurings.
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