Salad chain sparks fear of closures after it files for bankruptcy

Salad restaurants like Sweetgreen, Dig and Cava are growing in popularity in the US, but one restaurant is still struggling.

The owner of Tender Greens and sister brand Tocaya Modern Mexican has filed for Chapter 11 bankruptcy.

According to the bosses of One Table Restaurant Brands, customer numbers never recovered after a sharp drop during the pandemic.

The company operates 24 Tender Greens and 15 Tocaya locations in California and Arizona and has relied primarily on customers in downtown Los Angeles.

That part of the city still hasn’t recovered from Covid, and neither office workers nor residents are returning.

An increasing reliance on delivery apps has also caused problems, with sales at the two brands shifting to pickup during the pandemic — and now accounting for about 30 to 40 percent of orders.

But orders through Postmates and Uber Eats come with large commissions, which eat into profits

CEO Harald Herrmann wrote in the document: ‘A commission rate of 15 to 18 percent, depending on the supplier, combined with the associated packaging costs of four percent, make these sales less profitable.

‘It is not possible to pass on these full costs to the consumer, because this would have a negative impact on the demand for the restaurants.’

The company also blamed California’s $20-an-hour minimum wage, which while small enough — with fewer than 60 locations — to avoid being forced to pay, has forced them to raise wages to compete with workers at larger chains.

The company hopes to secure $3 million in financing from Breakwater Management to continue operations while it searches for a buyer.

“We have exhaustively explored all possible options to avoid bankruptcy, but ultimately restructuring our debt is the best decision for our team members, valued suppliers and loyal guests,” Herrmann said in a statement.

“We expect to emerge from this restructuring process stronger and better positioned to thrive in our highly competitive industry.”

Restaurants that serve fresh but quickly prepared salads like Tender Greens have become very popular in recent years. For example, Sweetgreen has 205 restaurants and Cava has almost 280.

Restaurants across America have been struggling this year. Faced with higher costs, they have raised menu prices — but that has led to a drop in customers.

A salad bowl at Tender Greens, with 24 locations in California and Arizona

Tocaya is also at risk

Larger chains like Applebee’s, TGI Fridays and Boston Market have all recently closed their restaurants, as have smaller chains like BurgerFi.

Red Lobster filed for bankruptcy in May and closed nearly 100 restaurants.

Chains have been hit hardest in California, where the minimum wage for fast-food restaurants increased to $20 an hour effective April 1.

In early June, Mexican chain Rubio’s closed 48 locations in the state and also filed for bankruptcy.

Small family businesses have also closed in America.

Earlier this month, for example, Fargo’s Pit BBQ in Texas closed its doors after more than two decades of serving brisket, ribs and other barbecue classics.