One Table Restaurant Brands, the parent company of fast-casual restaurant chains Tender Greens and Tocaya, filed for bankruptcy in an attempt to restructure significant debt and stabilize operations amid ongoing financial challenges. The ultimate goal is to prepare for a sale.
Tender Greens, known for its “farm-to-fork” concept, and Tocaya, a modern Mexican eatery, together operate 39 locations across California and Arizona (24 for Tender Greens and 15 for Tocaya).
The decision to file for bankruptcy follows a series of economic pressures caused by COVID, according to court documents. Both Tender Greens and Tocaya experienced severe revenue declines due to pandemic-related restrictions and changes in consumer behavior. CEO Harald Herrman, who began serving as CEO in February 2022, described the pandemic as “catastrophic.” Even though Tender Greens and Tocaya survived the peak of the pandemic, the “ferocious pressures and stresses” forced them to combine into a 50/50 business combination in August 2021. One Table was created to oversee both brands and provide a platform of shared people, resources, and supply chain synergies.
Tender Greens and Tocaya operate independently for all customer-facing activities and have their own leadership teams. On the back end, they share vendors and back-office and administrative support from One Table. The declaration revealed that while Tender Greens has shown some recovery, Tocaya has experienced struggling sales. Tender Green’s sales dropped by an average of about 32 percent per store in 2020; the chain recovered almost two-thirds of those sales since the merger three years ago. Tocaya is actually doing worse since the peak of COVID. In 2020, the fast casual suffered a loss of 32 percent per store, and it’s now averaging 41 percent fewer sales per store than before COVID.
Between June 2023 and May, Tender Greens earned $3 million in AUV. Tocaya swung a $2 million AUV in the same time frame. Tender Greens stores currently have a 9.4 percent restaurant-level profit margin. Tocaya’s profit margin is 1.6 percent. Before COVID, Tender Green’s profit margin was 16 percent and Tocaya’s was 13.1 percent.
Below is a breakdown of the chains’ AUV, as shown in the court filing:
Tender Greens
2019 AUV—$3.4 million
2020 AUV—$2.3 million
2021 AUV—$2.7 million
2022 AUV—$2.7 million
2023 AUV—$2.9 million
Tocaya
2019 AUV—$3.4 million
2020 AUV—$2.3 million
2021 AUV—$2.7 million
2022 AUV—$2.5 million
2023 AUV—$2.1 million
The company owes over $16 million to several lenders.
Herrmann detailed several key factors leading to the bankruptcy, including high debt burdens from pre-pandemic expansion efforts, costly settlements with landlords, and a damaging shift in the delivery model with third-party providers like Uber Eats and Postmates. The company also faced increased operational costs due to inflation and rising interest rates, further straining its financial stability.
The company began exploring a sales process in late 2022. There was some interest, but potential buyers were scared off by the debt.
In a bid to maintain liquidity during the bankruptcy proceedings, One Table secured a debtor-in-possession financing agreement with primary lender Breakwater Management LP. This financing will support ongoing operations and cover administrative expenses as the company works toward a sale.
Tocaya and Tender Greens join several entities that have declared bankruptcy thus far in 2024, including Red Lobster, Rubio’s Coastal Grill, Tijuana Flats, Sticky Fingers, Oberweis Dairy, Foxtrot and Dom’s Kitchen, a 25-unit Arby’s franchisee, a 48-unit Subway franchisee, a 17-unit Popeyes franchisee, and a six-unit Alamo Drafthouse Cinemas franchisee. Corner Bakery Café filed for bankruptcy in 2023, along with major franchisees from Burger King, Wendy’s, CKE, Popeyes, Denny’s, and McDonald’s.
