The top 10 retail bankruptcies so far this year
In 2024, several major retailers faced financial collapse, underscoring the ongoing turbulence in the retail sector. Companies like Red Lobster, Express, and most recently, T.G.I Fridays, once industry staples, have now joined the ranks of high-profile bankruptcies. These cases often reflect deep, systemic issues and are rarely the result of simple decisions.
The struggles of these companies are driven by different factors: macro-financial pressures, mounting debt, shifting consumer preferences, and intense competition. These pressures often force companies to make tough choices, such as store closures and layoffs, as they attempt to restructure and survive.
Bankruptcies can also signal broader industry trends, such as the rise of e-commerce and the decline of traditional stores (consider the dominance of Amazon, Shein, and Temu). However, they can also present opportunities for a fresh start (consider Red Lobster’s current efforts).
In 2023, bankruptcy filings jumped 16.8%, reaching nearly 453,000 cases, up from 388,000 the year before, according to statistics published by the U.S. Courts administrative office (these include both business and nonbusiness bankruptcies).
Most retail and food industry giants that file for bankruptcy opt for Chapter 11 of the U.S. Bankruptcy Code. Chapter 11 allows companies to reorganize their debts, continue operations, and negotiate deals with creditors, all while avoiding a complete shutdown. It also gives them time to make serious strategic changes, such as downsizing, closing underperforming stores, or renegotiating leases (something Red Lobster is also doing).
Chapter 11 also helps companies preserve the brand’s identity, allowing companies to reposition themselves and mitigate the perception of an outright failure. The process has the potential to even satisfy shareholders.
We’ve compiled a list of the top 10 U.S. bankruptcies in the retail sector so far this year, including the industry they fall into, and when and why they filed for bankruptcy.
It’s important to remember that each company’s bankruptcy process is unique, and can be influenced by factors such as size, shifting consumer demand, and overall notoriety.
Let’s take a look.
10. T.G.I. Fridays
Industry: Food and dining
Filing: Nov. 2
Reason for filing: T.G.I. Fridays has filed for Chapter 11 bankruptcy protection, citing the pandemic and its financial structure as key reasons behind its financial challenges. Founded in 1965, the beloved bar-and-grill chain said it’s on a mission to “ensure the long-term viability of the brand” after shuttering 50 locations across the country. The bankruptcy impacts 39 of its company-operated restaurants in the U.S., but franchise locations will remain open. Meanwhile, plans for the U.K. operator to acquire the brand have fallen thorough.
9. Chicken Soup for the Soul Entertainment
Industry: Streaming and entertainment
Filing: June 28
Reason for filing: Redbox owner Chicken Soup for the Soul Entertainment filed for bankruptcy due to high levels of debt and declining revenues. The company struggled to maintain profitability and pay its employees amid a challenging media landscape and increased competition from online streaming giants like Amazon and Netflix.
8. Rubio’s Coastal Grill
Industry: Food and dining
Filing: June 5
Reason for filing: Rubio’s holding company MRRC Hold Co filed for bankruptcy due to financial woes tied to declining sales, increased operational costs, and heavy debt. The company struggled to adapt to shifting consumer demands and fierce competition in the casual dining sector.
7. Big Lots
Industry: Retail and home goods
Filing: September 9
Reason for filing: Big Lots has been working to improve its sales and profitability since the Covid-19 pandemic, but has struggled due to high inflation and interest rates, which have reduced spending on home and seasonal items among its core customers.
6. Rue21
Industry: Clothing and apparel
Filing: May 2
Reason for filing: Rue21 filed for bankruptcy because it struggled with significant debt and declining sales, which were partly exacerbated by changing fashion trends and intense competition from fast fashion giants like Shein and Temu.
5. Express
Industry: Clothing and apparel
Filing: April 22
Reason for filing: Express filed for bankruptcy due to financial pressures, mounting debt, and intense competition from other retailers. In early March, it was de-listed from the New York Stock Exchange.
4. 99 Cents Only Stores
Industry: Discount retailer
Filing: April 7
Reason for filing: 99 Cents Only Stores filed for bankruptcy due to persistent financial struggles, some of which were piled on by the COVID-19 pandemic. The deep discount retailer was also facing rising debt and declining sales. In May, Dollar Tree said it would buy hundreds of the chain’s locations in effort to salvage some of stores.
3. Joann
Industry: Arts and crafts
Filing: March 18
Reason for filing: Joann filed for bankruptcy in early 2024 due to mounting debt and financial difficulties exacerbated by declining sales and increased competition.
2. The Body Shop
Industry: Beauty and fragrance
Filing: March 9
Reason for filing: The Body Shop’s U.S. arm filed for bankruptcy in early 2024, citing financial struggles and declining sales. Notably, it filed for Chapter 7 bankruptcy.
1. Red Lobster
Industry: Food and dining
Filing: May 19
Reason for filing: Red Lobster filed for Chapter 11 bankruptcy protection to clear financial obstacles linked to a series of failed lease-back agreements. There was also the costly $20 “endless shrimp” deal, which hurt earnings. (For those wondering, the deal is still available, but only on Mondays).
