SoCal Outback Steakhouse franchisee files for bankruptcy, citing California’s labor costs
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A San Diego-based franchisee of Outback Steakhouse filed for bankruptcy on Monday, citing expensive food and labor costs and declining customer traffic.
Cerca Trova Restaurant Group, which operates 61 Outback Steakhouse locations mostly in California, said it has been struggling since the COVID-19 pandemic. The company filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Wilmington, Del., seeking relief from hundreds of millions in debt.
Cerca Trova also operates Outback Steakhouses in Arizona, Colorado, Nevada and New Mexico but said that California’s minimum wage laws have made labor especially pricey for a majority of its restaurants.
More than half the company’s employees work in California, according to court documents.
California’s minimum wage, effective at the start of this year, is $16.90 per hour. Fast-food employers must pay a higher minimum wage of $20 per hour, but Outback Steakhouse is not classified as a fast-food establishment under the law.
Beverly Hills-based Fat Brands Inc. said in a statement that it filed for bankruptcy on Monday to restructure the debt it accumulated while expanding its company portfolio, citing ‘difficult and largely unforeseen’ market conditions.
“By 2026, the pressures on the business had converged,” Cerca Trova Chief Executive David Goronkin said in a court filing. “Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.”
The company’s debt has increased from $269 million in late 2020 to $449 million this year. It has between one and 49 creditors, court documents said.
Outback Steakhouse is not the only full-service casual dining restaurant to face challenges since the pandemic.
Red Lobster filed for bankruptcy in 2024, after its disastrous $20 all-you-can-eat shrimp deal. More recently, the Oprah-backed chain True Food Kitchen filed for Chapter 11 bankruptcy and closed three Southern California locations.
Inflation and economic pressure have led more Americans to eat at home or turn to fast food for a cheaper option, while the rise of GLP-1 weight-loss drugs such as Ozempic has curbed customers’ appetites.
The cost of beef has also been rising, up as much as 5% each year since 2022, Cerca Trova said in court filings.
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Cerca Trova was once the largest Outback Steakhouse franchisee, with 99 restaurants in 2018. As of June, there were 659 Outback Steakhouse locations nationwide, 544 owned and operated by the brand owner, Bloomin’ Brands. The rest are run by franchisees.
Bloomin’ Brands, headquartered in Tampa, Fla., also owns Bonefish Grill, Carrabba’s Italian Grill and Fleming’s Prime Steakhouse and Wine Bar.
The company has thrived this year despite pressures on the restaurant industry, with shares rising 60% since January. Shares fell Tuesday after Cerca Trova’s bankruptcy announcement and ended the day at $10.23, down 6.15%. The company’s market value is nearly $879 million.
The Scottsdale, Ariz.-based health food chain True Food Kitchen announced it filed for Chapter 11 bankruptcy on Monday and has closed 12 locations.
Cerca Trova, also known as Out West Restaurant Group, proposed selling its assets to Bloomin’ Brands for $26.3 million unless a higher offer emerges during the bankruptcy process.
“This is an isolated situation involving the franchisee and does not affect Bloomin’ Brands’ corporate operations, financing, or liquidity,” Bloomin’ Brands spokesperson Elizabeth Daly said in an email. “Bloomin’ Brands is participating in the process as a stalking‑horse bidder to acquire Out West’s assets and seeking to support operational continuity and protect the brand while the court‑supervised process moves forward. ”
Cerca Trova could not be immediately reached for comment.
