Dive Brief:
- Bar Louie filed for Chapter 11 bankruptcy protections and asked a bankruptcy court to permit the termination of some leases on March 26, according to court records.
- The gastropub franchise has closed locations in New Jersey, Ohio and Michigan, according to local press reports.
- Sales at the chain remained challenged after the COVID-19 pandemic, according to its franchise disclosure document
Dive Insight:
Bar Louie’s unit count had fallen from 71 total outlets at the start of 2021 to 66 at the end of 2023, according to its franchise disclosure document, and Bar Louie currently lists 48 on its website.
As late as 2023, Bar Louie was looking to kickstart franchised growth with a $25,000 discount on its franchising fees to prospective first-time operators. The Chapter 11 filing marks Bar Louie’s second bankruptcy in six years. In January 2020, the chain closed 38 unprofitable stores after enduring declines in customer traffic, with fewer people visiting malls and shopping centers — which anchor many of its restaurants.
Bar Louie’s non-hotel franchised restaurants had seen declining sales for years before 2020, according to its franchise disclosure document.
- In 2015, the chain’s non-hotel franchised units averaged $3,092,415 in sales.
- By 2019, that number had fallen to $2,223,667.
- After COVID-19, average sales recovered, reaching $3,168,545 in 2022.
- Sales fell again in 2023 to $3,090,933.
Inflation means that, while 2023’s sales level was similar in absolute dollar terms to 2015, each individual dollar was worth less. The chain’s AUV in 2015 for its non-hotel restaurants is equivalent to $4,203,840.98 in current dollars, according to the Bureau of Labor Statistics Inflation calculator.
According to a first day declaration, the chain’s recovery from COVID-19 was stymied by “various financial and operational challenges, including a number of underperforming locations, increased costs of operation, and mounting macroeconomic pressures.”
Bar Louie sought unsuccessfully to market itself before filing for bankruptcy and to restructure its operations.
Bar Louie attributed the underperformance of its stores to a combination of inflation increasing consumer price sensitivity and increased menu prices exacerbating that sensitivity. The chain tried to stem the losses through measures including “price changes, promotions based on data-driven marketing and customer analysis, and creative measures to lower the cost of goods sold and an analysis of underperforming locations.”
But restaurant-level EBITDA continued to deteriorate.
“Bar-level EBITDA for November 2024 was 38.8% less than the same period in 2023. As of December 1, 2024, year-to-date EBITDA was approximately 9% less than the same period in 2023,” according to the day one declaration.
In a press release Bar Louie said it reached a deal with creditors that would let it continue normal operations at its remaining 31 corporate units.
