California-based restaurant chain operator files for bankruptcy as it blames states brutal wage laws

A major California-based Outback Steakhouse franchise operator has gone bust, blaming the Golden State’s soaring labor costs, sky-high food prices and dwindling customers for pushing its restaurant empire to the brink.San Diego-based Cerca Trova Restaurant Group, also known as Out West Restaurant Group, filed for Chapter 11 bankruptcy protection Monday in Delaware, seeking relief from a staggering $449 million debt burden, according to the Los Angeles Times.The struggling company operates 61 Outback Steakhouse restaurants across California, Arizona, Colorado, Nevada and New Mexico, with the majority of its locations concentrated in the Golden State.The biggest news, opinion and culture shaping California right now.

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Never miss a story And company executives say California’s punishing minimum wage requirements have only made an already brutal financial situation worse.California’s statewide minimum wage jumped to $16.90 an hour in January, while fast-food chains have been required to pay workers at least $20 an hour since 2024.Although Outback Steakhouse is exempt from the higher fast-food wage mandate, its operators still face mounting payroll expenses under the state’s broader wage laws.More than half of Cerca Trova’s employees work in California, according to bankruptcy filings.“By 2026, the pressures on the business had converged,” CEO David Goronkin said in court documents cited by the Times.“Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.”The company’s financial woes have been brewing for years.Its debt has ballooned from approximately $269 million in late 2020 to $449 million this year, as inflation, rising operating expenses and shrinking customer traffic hammered its bottom line.Even the chain’s signature steaks have be...