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A BELOVED restaurant franchisee has filed for Chapter 11 bankruptcy and has slammed the brand for its ‘extreme’ requirements.
Smokin’ Dutchman Holdings, which operates four Dickey’s Barbecue Pit locations in Michigan filed for bankruptcy on Monday, according to court documents.
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Sonny’s BBQ rival Dickey’s Barbecue Pit operates over 500 restaurant locations across 44 states.
Franchising requirements were listed as the reason for the bankruptcy by the operator, according to a declaration by Smokin’ Dutchman CEO Krage Fox.
Dickey’s “imposed extreme and unreasonable financial demands,” Fox said in the declaration.
The restaurant is the latest of many who have now watched a franchisee ask the court for debt relief.
READ MORE ON STORE CLOSURES
Miracle Restaurant Group, a 25-unit Arby’s franchisee, declared Chapter 11 bankruptcy on June 20, according to court filings.
But cited macroeconomic problems as the reasons for the bankruptcy.
Fox did not reveal what aspects of Dickey’s franchising requirements caused financial hardships.
The franchisees are charged a 6% royalty rate and a 3% marketing rate.
But the rates charged are below what many other brands charge, according to RestarauntDive.
The U.S. Sun has reached out to Dickey’s for comment.
Jeff Gruber, Dickey’s Senior Vice President called Smokin’ Dutchman’s characterization of its franchising terms was inaccurate in an email to RestarauntDive.
“When Smokin’ Dutchman communicated its individual difficulties roughly 18 months ago, Dickey’s responded by providing extensive supplemental operational support,” Gruber told RestarauntDive.
“And corporate resources in an effort to stabilize Smokin’ Dutchman’s business operations,” Gruber said.
Gruber said Dickey’s will continue to send support to Smokin’ Dutchman.
Restaurant closures in 2024
BOSSES at major dining chains have announced a series of restaurant closures. The U.S. Sun has compiled a list of the chain’s affected.
- Cracker Barrel: Stores in Medford, Oregon, Columbia, South Carolina, and Sacramento, California, have closed.
- Mod Pizza: Bosses dramatically shuttered 27 shops in April, including some in the state of California.
- Frisch’s Big Boy: Restaurant chiefs confirmed the closure of a restaurant in Covington, Kentucky in April.
- Outback Steakhouse: The chain will shutter 41 ‘underperforming’ locations this year.
- Two Bucks: Four restaurants in Ohio closed in April.
- Chili’s: A restaurant in Port Arthur, Texas, has shut permanently as well as one in Irvine, California, and one in Pittsfield, Massachusetts.
- Friendly’s: Bosses confirmed an establishment in Ronkonkoma, Long Island will close.
- Pizza Hut: A restaurant in Glen Falls, New York, closed at the end of March, followed by four in Ohio in June and 15 in Indiana. This was followed in July by a bankruptcy filing from its parent company which announced the closure of 150 locations.
- Carl’s Jr.: The first Boise, Idaho location has closed.
- In-N-Out: An Oakland location closed earlier in the year due to crime in the area.
- Cheesecake Factory: The chain is set to shutter a location in Memphis, Tennessee in July.
- Applebee’s: Announced the closure of between 25 and 35 locations this year.
- Red Lobster: The seafood chain filed for bankruptcy in May and shuttered over 100 locations.
- Taco John’s: Shuttered a restaurant in Minnesota and put the building up for sale in May.
- Frisco’s Chicken: The poultry restaurant shuttered all of its locations over the summer
- Rubio’s Coastal Grill: Has announced the closure of 48 locations in California after filing for bankruptcy.
- Burger King: Shuttered a location in California in June after 30 years.
- Foster’s Freeze: Shuttered a location in California after five decades in business due to financial struggles.
- Chicken Salad Chick: After nine years the restaurant shuttered one location in Jacksonville, Florida, with no reason given.
- México Lindo: The New York City-based restaurant announced its final day after 52 years and finally shuttered its doors for good on July 31.
- American Dream Pizza: Closed all of its locations in Oregon in July.
- Tender Greens: The Southern California-based chain filed for bankruptcy.
- Lefty’s Famous Cheesesteaks, Hoagies, & Grill: Abruptly shuttered 18 locations in July due to a family feud.
- Firehouse Subs: Shuttered a location in the Tri-Cities area of Washington State over the summer citing “unforeseen circumstances”
- Taco Time: The Taco Bell rival shuttered a location in Seattle after 50 years following a death in the franchise owner’s family.
- Burgerim: Shuttered a location in Burlington, Massachusetts in July, reigniting bankruptcy fears from 2020.
- Denny’s: The chain has shuttered over 40 locations so far this year with the owner of the one outlet blaming vandalism.
- Starbucks: The chain shuttered one of its most iconic locations in New York City after almost three decades with fans blaming crime. It also lost a location in Seattle.
- Subway: In August, the sandwich chain shuttered over 20 locations across the US and Canada after a franchisee lost money after being a victim of fraud.
- IHOP: A restaurant in New Hampshire shut its doors after 24 years, leaving four locations in the state.
- Switchback Coffee Roasters: The popular chain filed for bankruptcy in August after over a decade in business.
- Jimmy John’s: The sandwich shop chain shuttered a location in Nevada on August 19 after 12 years citing overexpansion issues.
- KFC: Closed the remaining three locations in Rockford, Illinois all on the same day on August 19. In total, it closed six locations across four cities in Illinois.
- Rusty Bucket: The chicken shop chain confirmed it would officially leave Florida as it announced a handful of closures including in Sarasota and Ohio.
- Buca di Beppo: The Olive Garden rival abruptly shuttered 44 locations across five states before filing for bankruptcy.
- Red Robin: Announced the closure of its Ashburn, Virginia location on August 25 after 15 years in business.
- Noodles & Company: Shuttered dozens of locations due to their contribution to around $2 million worth of losses.
- Shoney’s: The classic American-style food chain founded in 1947 officially exited Ohio after three decades of business as it reduced its operational footprint.
- Homegrown: The sandwich chain based in Seattle announced the closure of 10 locations leaving 150 employees in the lurch.
- World of Beer: Filed for bankruptcy after closing 14 outlets.
- Arby’s: The chain announced a number of closures this year including in Lexington, Kentucky, Akron, Ohio,
- Uno Pizzeria & Grill: Shuttered a location in New Jersey in July, leaving just two in the state, followed by the closure of a Baltimore location in August.
Dickey’s restaurants are also undergoing multiple changes under the new middle of a capital reinvestment program.
Restaurants will receive upgrades including new exterior signs, store interior refreshes, technology hardware upgrades, and local advertising across the brand, according to Gruber.
RESTAURANTS INCOME REVEALED
Dickey’s does not reveal the sales of its franchises on its Franchise Disclosure Document which makes it hard to predict how much each restaurant earns.
But Smokin’ Dutchman’s annual revenue for 2023 was $3,336,000 so each of the four restaurants earned around $830,000, according to RestarauntDive.
Dickey’s has lost more than 15 franchised restaurants over the past three years, according to RestarauntDive.
Barbeque fans can find Dickey’s restaurants located in suburban shopping centers or on busy streets.
