The restaurant business can be incredibly challenging. Changing tastes and trends can leave a restaurant or even an entire chain suddenly in dire financial straits, even when entrepreneurs identify the right combination of location, menu choices, suppliers, branding and all of the other elements that go into a successful operation.
Back in 2012, two German students met while studying at the University of Texas at Austin. They went on to open a Mediterranean restaurant called Verts Kebap near campus. The restaurant went through a few name changes over the next five years and a shift from a “street food” menu to more upscale food before landing on Noon Mediterranean. It also expanded to dozens of locations and relocated its corporate headquarters to New York City in 2017.
That year, Noon Mediterranean did nearly $16 million worth of business. However, their total for the first half of this year was only a little over $6 million in sales. Noon Mediterranean recently shut down six locations and let go 79 restaurant employees, in addition to 10 from its headquarters office. The chain then filed for bankruptcy, listing between $10 and $50 million in debt owed to between 50 and 99 creditors, with less than $10 million in assets.
As part of its Chapter 11 filing, the company indicated that it may close down some additional restaurants that are not performing well financially. It will ultimately attempt to keep a smaller core of stronger performing locations in business. This is the kind of opportunity Chapter 11 provides for struggling businesses: a chance to work with creditors on a debt reorganization and new business plan moving forward that takes advantage of what assets can still be leveraged. Chapter 11 bankruptcy has helped many businesses turn their fortunes around, helping to lead the businesses back to profitability.