Popular Fried Chicken Chain Files for Chapter 11 Bankruptcy: What It Means for Fans
The restaurant industry is still grappling with the effects of the COVID-19 pandemic, as numerous fast-food and fast-casual chains face financial struggles due to reduced foot traffic, rising food prices, and increased interest rates.
One such chain, Tijuana Flats Restaurants, filed for Chapter 11 bankruptcy on April 19 in the U.S. Bankruptcy Court for the Middle District of Florida. After launching a strategic review in November 2023 to explore turnaround options, the Tex-Mex chain opted for a sale to a new ownership group. Along with closing 11 of its locations, the company is seeking to revitalize its restaurants and improve the overall customer experience through its bankruptcy reorganization plan.
Not all chains are as fortunate. Foxtrot and Dom’s Kitchen & Market, which operated 33 locations across the U.S., filed for Chapter 7 liquidation on April 23, marking the end for the company. It failed to recover from financial distress that began during the COVID pandemic.
On the other hand, Sticky’s, a New York-based fast-food chain known for its chicken fingers, is pursuing reorganization through Chapter 11 bankruptcy to recover from its pandemic-related financial struggles.
Sticky’s Path to Recovery
Sticky’s Holdings, the parent company of Sticky’s, filed for Chapter 11 bankruptcy on April 25. The company’s financial distress resulted from the same challenges faced by much of the restaurant industry—decreased foot traffic due to the pandemic, rising commodity prices, and legal issues.
Sticky’s reported $5.75 million in assets and $4.67 million in liabilities in its bankruptcy filing. Its largest unsecured creditor, US Foods, is owed over $449,000. Despite the company growing from $500,000 in sales in 2013 to $22 million in 2023, foot traffic never fully returned to pre-pandemic levels, according to Sticky’s CEO Jamie Greer.
The chain was also hit by inflation, which drove up food costs and forced Sticky’s to raise its menu prices. This, in turn, further dampened customer traffic. To cut costs, Sticky’s vacated its corporate office in New York in 2021 before its lease expired.
Legal Woes Push Sticky’s to the Brink
Sticky’s also faced mounting legal problems. In June 2021, the company’s landlord secured a $600,000 summary judgment for unpaid rent and legal fees, which Sticky’s is still appealing. Additionally, Sticky Fingers Restaurants LLC filed a trademark infringement lawsuit against Sticky’s in June 2022. The ongoing legal expenses have added significant financial strain to the company.
In February 2024, Sticky’s entered into an equity financing transaction that converted $2.42 million in convertible notes. This helped alleviate some of the company’s short-term liquidity issues, but the broader financial challenges ultimately led the chain to seek bankruptcy protection and reorganization.
Sticky’s Operations and Future
Founded in 2012, Sticky’s is known for its fresh, antibiotic-free chicken fingers and a variety of 18 in-house sauces. The chain currently operates 12 locations, nine in New York and three in New Jersey, but has closed multiple locations in New York, New Jersey, and Pennsylvania.
Sticky’s had previously established a franchise entity, but no franchise locations have opened. The company now hopes its Chapter 11 reorganization will provide a path to recovery and long-term stability.
