A POPULAR Cajun restaurant chain had filed for bankruptcy, and partly blamed competition from chains like Chili’s.
Razzoo’s Cajun Cafe recently closed three of its locations before making the filing, and cited several other reasons for its dip in sales.
Razzoo’s Cajun Cafe filed for bankruptcy recently (stock)[/caption]
This is while competitors like Chili’s have seen a brand resurgence in recent years.
Chili’s President, Kevin Hochman, recently told CNBC that initiatives like a new advertising strategy helped it make a comeback.
Razzoo’s, which is based in Texas, cited debts and liabilities between $10 million and $50 million.
In a court filing with the Southern District of Texas, Razzoo’s highlighted some reasons for the bankruptcy.
Namely, it claimed that competition from companies like Chili’s and Applebee’s had siphoned off a large number of its customers.
Razzoo’s said that heavy discounting from these competitors depleted its own customer base.
The chain also referenced other issues it had faced, like inflation and the fallout from the pandemic, as well as supply issues with its crawfish.
Higher competition for crawfish in the industry hit Razzoo’s retail prices.
As of earlier this year, Razzoo’s had 24 restaurants in the US, but last month it closed three underperforming ones in Texas and Oklahoma.
The court filing revealed that Razzoo’s would consider closing further restaurants in the future to further “right-size” the business
But Razzoo’s also said that it believed it was in a position to further expand into Southeast at some point in the future, too.
JOB SAVER
When Razzoo’s filed for Chapter 11 protection, it did so to save the thousands of jobs that had been put at risk.
Chapter 11 bankruptcy allows a business to stay open and continue operating as normal.
The debtor’s attorney, Matthew S. Okin, wrote in court papers that the debtors were confident Razzoo’s could find its way back to stability following the filing.
Restaurant closures in 2025
Denny’s – Denny’s has confirmed that up to 150 locations are set to close in the US by the end of the year as many of them are no longer profitable.
Red Lobster – The chain has said that it plans to close over 100 stores across the country this year as new CEO Damola Adamolekun takes over.
TGI Friday’s – TGI Friday’s is still being forced to shutter locations thanks to a bankruptcy filing, including 30 in April alone.
Applebee’s – This chain is projecting a loss of 20 to 35 Applebee’s spots in 2025 but is teaming up with IHOP to introduce dual-branded locations with a curated menu of the two’s best items.
Noodles & Company – This emporium is set to close between 17 and 21 locations in 2025 following a difficult 2024.
Okin cited Razzoo’s strong presence in its home state as one of the reasons why.
He said: “With a strong geographic foothold in the state of Texas, the Debtors believe that the Razzoo’s brand remains well-positioned for additional expansion throughout the Southeast.”
RENT IS DUE
One of the prevailing reasons that Razzoo’s had to file for bankruptcy was that it was no longer able to pay its rent and credit obligations.
Razzoo’s currently owes a handful of creditors millions of dollars each, the court filing revealed.
This placed a significant burden on its liquidity as a business, which only made the problem worse.
In turn, this made it harder for Razzoo’s to pay off all of its remaining debts.
