Bankrupt Restaurant Chain Is Making a Comeback & Opening New Locations
Just six months have passed since a Boston-based restaurant chain filed for bankruptcy due to lagging sales and a lack of financing, but the company is already making a comeback and eyeing major growth.
This reemerging chain is Clover Food Lab, which serves an ever-changing menu of veggie-forward foods made with seasonal ingredients. Clover started out as a food truck in 2008 and eventually grew popular enough to expand to more than a dozen brick-and-mortar restaurants throughout Massachusetts. But like many other chains, it struggled during the pandemic and had to revamp its business to start offering daily meal boxes, which now make up 20% of its revenue, Restaurant Business Magazine reported.
Sales and customer traffic didn't recover as much as the chain had anticipated, forcing Clover to file for Chapter 11 bankruptcy during the fall of 2023 after failing to renegotiate leases and raise enough money to continue funding its operations.
"COVID changed everything for restaurants like us. The way we eat, drink, work, and get together has shifted substantially and, while Clover has seen a steady recovery in sales (and the creation of a whole new part of Clover with our meal box program), our sales are still below pre-pandemic levels," Clover said in a November blog post announcing the bankruptcy.
However, as of this week, Clover has exited bankruptcy and already has plans to start growing again. The company currently operates 13 restaurants after closing two locations during bankruptcy. Over the next five years, it has an ambitious goal to expand to 60 restaurants throughout New England, per Restaurant Business Magazine.
As for where it's headed, Clover wants to focus its expansion on urban spaces and university areas. Customers can also expect to see the chain open more smaller-format stores as it grows. Additionally, Clover is planning to give its brand a face-lift in an effort to draw new customers into its restaurants.
While Clover Food Lab has now successfully emerged from bankruptcy, that's not always how it goes. Fellow restaurant chain Red Lobster could be nearing its own bankruptcy filing. Bloomberg, citing unidentified sources familiar with the matter, reported earlier this month that the seafood chain is considering filing for Chapter 11 bankruptcy after struggling with high food and labor costs and significant operating losses.
The return of Red Lobster's popular Ultimate Endless Shrimp deal in June 2023 was a major contributor to its current financial woes. Customers ordered the all-you-can-eat deal far more than the chain anticipated, resulting in $11 million in operating losses and forcing Red Lobster to raise the price from $20 to $25.
The Florida-based Tex-Mex chain Tijuana Flats also recently filed for Chapter 11 bankruptcy and closed 40 of its locations, bringing its total store count down to 91. Additionally, the Midwestern ice cream and dairy company Oberweis announced its own Chapter 11 filing earlier this month, but it already has two potential buyers lined up, CBS News reported.
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