Another Popular Regional Burger Chain Just Filed For Bankruptcy
Meatheads Burgers & Fries, a popular Illinois-based chain that claims to serve "award-winning" burgers, is the latest fast-food business to file for Chapter 11 bankruptcy. Its owner, Crave Brands, has also declared bankruptcy. However, the company's lender is raising questions about the filings, calling them a "stunt" and asking for a dismissal.
Meatheads operates 13 restaurants in the Chicago area and prides itself on serving some of the best burgers in the Midwest, according to its website. Like most hospitality businesses, the chain has had a rough time during the COVID-19 pandemic, with its sales dropping 18% between 2019 and 2020, according to Restaurant Business. However, some of its debt is due to alleged mismanagement, lender LQD Financial Corp. claims. (RELATED: America's Largest Fast-Food Chain Is on a Downward Spiral, Reports Say)
According to the bankruptcy filing, the chain has a debt of $8.4 million and total assets of $6.7 million. The company also received Paycheck Protection Program loans of more than $982,000 in 2020 and nearly $1.44 million this year in order to sustain its workforce of 75 full-time and 86 part-time employees.
Additionally, the chain owes LQD $6.65 million, plus interest, which it borrowed in 2019 in order to allow Crave's former manager Steve Karfaridis and CFO Michael Webb to acquire the company, according to LQD's dismissal filing. It further alleges that the company is filing for bankruptcy in order to allow Karfaridis to remain in charge after the lender exercised its right to remove him from his leadership position.
LQD also claims that the two owners misused the millions lent to them for the acquisition for personal benefit. If the bankruptcy filing is dismissed, the lender plans to sell the chain to a "well-known and reputable operator," which would effectively save it from going out of business.
For more on restaurant bankruptcies, check out the 5 Adored Burger Chains That Declared Bankruptcy in 2020. And don't forget to sign up for our newsletter to get all of the latest restaurant news delivered straight to your inbox.