Outback Steakhouse is not going out of business. But its largest US franchisee just did—and that has consequences for diners and investors alike.
On November 2, 2026, Cerca Trova Restaurant Group Holdings, operating as Out West Restaurant Group, filed for Chapter 11 bankruptcy protection in Delaware . The San Diego-based company runs 61 Outback Steakhouse locations across California, Arizona, Colorado, Nevada, and New Mexico. Before filing, it had already shut down 10 underperforming restaurants between October 11 and October 25 .
This is a franchise problem, not a brand problem. Outback’s parent company, Bloomin’ Brands, has moved quickly to contain the damage—and potentially turn it into an opportunity.
The Full Closure List
The 10 restaurants closed in October were spread across four states. According to court documents and reporting, the affected locations include :
Arizona:
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Tucson
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Mesa
California:
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Buena Park
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Valencia
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Foothill Ranch
Colorado:
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Colorado Springs
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Highlands Ranch
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Aurora
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Littleton
Nevada:
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Reno
Three additional California locations—Brea, Pittsburg, and Westminster—had already closed earlier in 2026, bringing the franchisee’s total closures this year to 13 .
Importantly, the 10 October closures are not part of the proposed sale to Bloomin’ Brands. The roughly 400 employees who worked at those locations have received their final wages . The remaining 61 Out West restaurants are operating normally while the bankruptcy process unfolds.
Why Did the Franchisee Collapse?
The bankruptcy filing paints a picture of a business that never fully recovered from the pandemic and then got squeezed by inflation.
Out West’s troubles stretch back years. The company borrowed heavily to expand in the mid-to-late 2010s, then hit a wall in 2018 when customer traffic declined and costs rose . The pandemic made things worse: revenue plunged 35%, and the company could not repay loans that came due in April 2022 .
By 2026, multiple pressures had converged. CEO David Goronkin said in a court filing that “guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise” . Beef prices—the company’s biggest expense—climbed 15% to 20% in 2022 and continued rising afterward . California’s minimum wage requirements hit especially hard, since about 54% of Out West’s roughly 3,669 employees work in the state. Average kitchen wages there rose approximately 26% between 2019 and 2022 .
The debt burden became crushing. Accrued interest and fees ballooned from about $11 million to over $170 million. In fiscal 2025 alone, interest expense reached approximately $45.9 million—more than five times the company’s earnings measure for that year . By the time of filing, Out West had $3.6 million in cash .
Bloomin’ Brands Steps In
Outback’s parent company is not sitting back. Bloomin’ Brands has agreed to acquire substantially all of Out West’s assets for $26.3 million in a “stalking horse” bid—meaning the offer sets a floor for other potential buyers . The deal is subject to bankruptcy court approval and competing bids.
Bloomin’ is also providing up to $5.5 million in interest-free debtor-in-possession financing to keep the restaurants running during the proceedings .
The strategic logic is straightforward: acquiring these locations gives Bloomin’ direct operational control over a majority of Outback’s US franchised restaurants. Outback has about 544 company-owned units and roughly 115 franchised ones in the US . Buying Out West’s 61 locations would pull more than half of the franchised system back under corporate control.
Bloomin’ has emphasized that this is an isolated franchisee issue, not a sign of corporate distress. “This is an isolated situation involving the franchisee and does not affect Bloomin’ Brands’ corporate operations, financing, or liquidity,” a spokesperson said .
What This Means for the Brand and Franchise Model
The Outback case is a textbook example of the risks embedded in franchise models—risks that matter for anyone studying business structures.
For the franchisor: Bloomin’ gets to consolidate control and apply its turnaround playbook (including a $75 million investment in food quality and service) to more locations. The stock market reacted positively, with Bloomin’ shares rising over 7% after the announcement .
For the franchisee: Out West’s collapse shows how debt-fueled expansion, rising labor costs, and commodity inflation can overwhelm even a well-known brand. The franchisee bore the capital costs and operating risks while paying royalties to the parent company—a structure that works brilliantly in good times and disastrously in bad ones.
For the industry: This follows the Chapter 11 filing of Wendy’s franchisee Meritage Hospitality Group in September, which also cited deteriorating beef economics and weak brand marketing . The pattern suggests that casual dining franchisees, particularly those with heavy debt loads, are under severe strain.
Key Dates Ahead
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December 8, 2026: Deadline for competing bids
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December 11, 2026: Auction (if competing bids emerge)
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December 15, 2026: Bankruptcy court hearing to approve the sale
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January 31, 2027: Outside closing date for the Bloomin’ acquisition
If the sale goes through, the 61 remaining Out West restaurants will transition to corporate ownership. Gift cards and the Dine Rewards loyalty program—with about 235,000 members in these locations—are expected to be honored under the deal .
The Bottom Line
Outback Steakhouse itself is not bankrupt. Your local Outback is almost certainly open. But the bankruptcy of its largest franchisee reveals the fault lines in the casual dining franchise model: rising costs, changing consumer habits, and the heavy debt loads that franchisees carry. For Bloomin’ Brands, the crisis is also an opportunity to tighten its grip on the brand. For everyone else, it is a case study in why franchise structures demand careful balance between growth and financial discipline.
FAQ
Q1: Is Outback Steakhouse closing nationwide?
No. Outback Steakhouse itself has not filed for bankruptcy. Only its largest franchisee, Out West Restaurant Group, filed for Chapter 11. The 61 remaining Out West locations are open, and most Outback restaurants are company-owned .
Q2: Which Outback locations closed?
Ten restaurants closed in October 2026 across Arizona (Tucson, Mesa), California (Buena Park, Valencia, Foothill Ranch), Colorado (Colorado Springs, Highlands Ranch, Aurora, Littleton), and Nevada (Reno) .
Q3: Why did the franchisee go bankrupt?
Out West struggled with declining customer traffic, rising beef and labor costs (especially California minimum wage hikes), and a debt load that grew to roughly $449 million. Interest expenses alone reached $45.9 million in fiscal 2025 .
Q4: What happens to the remaining 61 Outback locations?
They remain open during bankruptcy. Bloomin’ Brands has agreed to buy them for $26.3 million, subject to court approval and competing bids. If approved, they will become corporate-owned locations .
Q5: Will gift cards still work at these locations?
Out West has asked the court for permission to keep honoring gift cards and the Dine Rewards loyalty program. Under the proposed sale, Bloomin’ Brands would assume unredeemed gift card obligations .
