Cerca Trova Restaurant Group Holdings, one of the largest owners of Outback Steakhouse franchises in the country, filed for Chapter 11 bankruptcy this week, citing years of rising food and labor costs combined with slow foot traffic since the pandemic.
The company operates 61 Outback Steakhouse restaurants across California, Arizona, Colorado, Nevada and New Mexico. California alone accounts for 31 of those locations. Cerca Trova employs nearly 3,670 workers.
In a court filing cited by Bloomberg News, Chief Executive Officer David Goronkin said the pressures on the business had built up over time. “By 2026, the pressures on the business had converged,” Goronkin said. “Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.”
As part of the bankruptcy process, Cerca Trova has proposed selling its assets to Bloomin’ Brands, the corporate owner of Outback Steakhouse, for $26.3 million.
Legal and Wage Troubles
This past summer, a California court approved a $1.6 million wage-and-hour class action settlement against Cerca Trova. Since then, two additional class action lawsuits have been filed against the company in California. One of those cases accuses the franchisee of failing to pay overtime and minimum wages and of not providing required meal or rest breaks.
In court filings, Cerca Trova said it could not cover the settlement payments “without significantly impacting its liquidity.” It remains unclear how the bankruptcy filing will affect those obligations.
California’s recent increases to local and state minimum wages have also added financial strain on the company, according to court documents.
From Industry Leader to Bankruptcy
Cerca Trova was once the largest Outback franchise operator in the country. In 2018, the group owned 99 Outback restaurants and generated roughly $340 million in annual sales.
The company took on debt during the pandemic to stay afloat. While sales eventually recovered, Cerca Trova was unable to outpace the interest accruing on that debt.
Beef, the company’s largest single expense, rose 15% to 20% in 2022 and has continued climbing about 5% annually since then, according to court documents. Cerca Trova had approximately $3.6 million in cash on hand at the time of its bankruptcy filing.
A spokesperson for Bloomin’ Brands said the bankruptcy is “an isolated situation involving the franchisee and does not affect Bloomin’ Brands’ corporate operations, financing, or liquidity.” Attorneys for Cerca Trova did not immediately respond to a request for comment.
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