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Salad chain sparks fear of closures after it files for bankruptcy
Salad restaurants like Sweetgreen, Dig and Cava are soaring in popularity in the US - but one is struggling.
The owner of Tender Greens and its sister brand Tocaya Modern Mexican have filed for Chapter 11 bankruptcy.
Customer numbers never recovered after dipping significantly during the pandemic, bosses at One Table Restaurant Brands said.
The company operates 24 Tender Greens and 15 Tocaya units in California and Arizona, and they were especially reliant on customers in downtown Los Angeles.
That area of the city has never recovered from Covid, with office workers and residents alike not returning.
An increasing reliance on delivery apps caused problems too. Sales at the two brands shifted towards carryout during the pandemic - and now makes up around 30 to 40 percent of orders.
Tender Greens, which started in Culver City in 2006, has filed for bankruptcy
But orders via Postmates and Uber Eats carry big commissions - that eat into profits
CEO Harald Herrmann wrote in the filing: 'A commission rate of between 15 to 18 percent depending upon the provider, coupled with related packaging costs of four percent, make these sales less profitable.
'Passing this entire cost along to the consumer is not possible as it would have a negative impact on demand for the Restaurants.'
The company also blamed California's $20-an-hour minimum wage. While the company is small enough - having under 60 outlets - to avoid being forced to pay it, they have had to raise wages to compete with workers with bigger chains.
The company is hoping to get $3 million in financing from Breakwater Management to continue operating while they try to find a buyer.
'We ran every possible option to the ground in order to avoid bankruptcy, but ultimately, restructuring our debt is the best decision for our team members, valued vendor partners and loyal guests,' Herrmann said in a statement.
'We expect to emerge from this restructuring process stronger and better positioned to prosper in our hyper-competitive industry.'
Restaurants that serve fresh but quickly prepared salads like Tender Greens have soared in popularity in recent years. Sweetgreen, for example, has 205 restaurants, and Cava has almost 280.
Across America, Restaurants have increasingly been struggling this year. Faced with higher costs, they have put up menu prices - but that has led to a fall in customers.
A salad bowl at Tender Greens, with 24 locations in California and Arizona
Tocaya is also at risk
Bigger chains like Applebee's, TGI Fridays and Boston Market have have all recently shuttered restaurants, as have smaller chains like BurgerFi.
Red Lobster filed for bankruptcy in May and also shuttered almost 100 restaurants.
Chains have been worst hit in California where the minimum wage for fast food restaurants jumped to $20-an-hour from April 1.
In early June, Mexican chain Rubio's shut 48 locations in the state and also filed for bankruptcy.
Across America, mom-and-pop operations have also been shutting.
Earlier this month, for example, Fargo's Pit BBQ in Texas closed after more than two decades of serving brisket, ribs and other barbecue classics.