All fast food chains have suffered in the past year as inflation-weary Americans have eaten a lot less.
Burger chains like McDonald’s, Burger King and Wendy’s have all had problems.
But sandwich chains have been worse hit. For example, Subway has seen sales down 9 per cent – amid complaints of huge price hikes and tired looking shops.
And now one of Subway’s regional rivals – which never recovered after sales dipping during the pandemic – is in trouble.
Arizona‘s iconic frozen drink and sub chain Eegee’s has filed for Chapter 11 bankruptcy, making it the latest casualty in a brutal year for fast-food restaurants.
The announcement came with the closure of five locations across Tucson and Phoenix, leaving die-hard fans heartbroken.
The December 6 filing in Phoenix federal court gives the embattled chain – owned by private equity firm 39 North Capital – a chance to reorganize its finances.
Eegee’s joins a grim list of 2024 fast-food bankruptcies, including Red Lobster, BurgerFi, and Buca di Beppo.
Interim CEO Chris Westcott, who only took over two weeks ago, said: ‘The brand has been struggling since the pandemic. We just haven’t bounced back to pre-pandemic levels.’
Eegee’s – Arizona ‘s iconic frozen drink and sub chain filed for Chapter 11 bankruptcy – on December 6
According to court documents, Eegee’s owes about $2.8 million to suppliers, mostly for food.
Fans of the iconic frozen fruit drinks and sub sandwiches were left reeling as they saw ‘Closed’ signs at locations like West Grant Road and East Speedway.
A note in one drive-thru thanked customers for their support, directing them to nearby locations. Bosses promised customers that no more closures are planned for now.
The company, which began in 1971 as a frozen lemonade truck, has seen rapid changes since being bought in 2018.
An ambitious expansion into Phoenix saw Eegee’s balloon to 35 locations. But a trio of Tucson stores shut down last summer, raising concerns about the chain’s future.
Westcott said the bankruptcy was ‘a step towards stabilizing the brand.’
He promised ‘business as usual’ at remaining locations, with no menu changes or disruptions to loyalty programs.
The five shuttered Eegee’s locations are 6810 E. Tanque Verde Rd., Tucson; 502 W. Ajo Way, Tucson; 7760 E. Speedway Blvd., Tucson; 1530 W. Grant Rd., Tucson; abd 3514 W. Peoria Ave., Phoenix
Eegee’s problems come just the week a warning that Subway is at risk of being ‘gobbled up’ by rival Jersey Mike’s.
Bosses have ignored ‘screams for help’ from the army of small business owners that run most of the Subway shops under franchise, according to Robert Zarco, a lawyer representing thousands of franchisees.
The sandwich chain had rolled out a $6.99 meal deal at the start of November in a bid to lure back customers. But the deal was abruptly ditched last week after it failed to deliver the ‘anticipated results’.
The sandwich chain has been at odds with its sub shop owners for months.
The $6.99 deal – which franchisees claimed would be unprofitable – was the latest in a series of unpopular moves that CEO John Chidsey had pushed on store owners.
Others include an 8 percent royalty fee on a store’s gross revenue regardless of how much profit is made, forced remodeling and ‘undisclosed’ technology fees.
‘If Subway keeps treating its franchisees the way it has over the last five years where it is ignoring their screams for help, Jersey Mike’s will have an easy task of gobbling up the Subway brand,’ lawyer Robert Zarco who represents the North American Association of Subway Franchisees. told the New York Post.
It has been a bad year for restaurants – with scores of bankruptcies and closures.
Hooters has closed around 40 restaurants this year
Industry experts blame stubborn inflation, higher wages, and consumers tightening their belts when it comes to eating out.
Big name chains like Applebee’s, TGI Fridays and Boston Market have have all shuttered restaurants.
Red Lobster filed for bankruptcy in May and shuttered almost 100 restaurants. It has now emerged from bankruptcy.
BurgerFi also filed for bankruptcy in September, sparking sparks fears of mass closures of its 162 locations.
Meanwhile, it emerged in September that Hooters – known for its scantily-clad waitresses – is the latest to face financial problems as it deals with $300 million of debts. It also closed about 40 ‘underperforming’ restaurants earlier this year.
