The popular American diner chain Hwy 55 Burgers, Shakes & Fries, known for its retro-diner vibe, has filed for Chapter 11 bankruptcy protection.
According to Mail Online, The financial woes stem from prolonged impacts of the COVID-19 pandemic, labor shortages, and a shift in operational strategy.
Little Mint, Inc., the parent company based in Mount Olive, North Carolina, filed the petition on December 31 in the U.S. Bankruptcy Court for the Eastern District of North Carolina. This filing followed a rough patch that resulted in the closure of 13 corporate-owned locations.
Hwy 55 faced significant financial troubles, with the company reporting liabilities ranging from $10 million to $50 million, while valuing its assets between $1 million and $10 million. The firm's debt structure includes about $11 million in secured debts and $5.8 million in unsecured debts.
Founded in 1991 as Andy's Cheesesteaks & Cheeseburgers, Hwy 55 rebranded in 2012 and expanded across multiple southern states. The brand's ambitious growth included a shift in 2018 from strip mall locations to standalone buildings equipped with drive-thru windows, aiming to boost accessibility and service speed.
Despite generating an impressive $24.4 million in revenue in 2023, the changed operational strategy has not translated into profitability, with the company reporting net losses for both 2022 and 2023. This backdrop of financial instability paints a grim future for the remaining 22 corporate-owned and 71 franchised locations.
Issues didn't stop at financial problems; in 2023, a newly opened location in Murfreesboro, Tennessee, had to close shortly after its inauguration. The site encountered leadership challenges and faced allegations of child labor law violations, signaling broader operational difficulties.
Kenny Moore, the founder of Hwy 55, found himself embroiled in a compliance agreement with the U.S. Department of Labor in March 2024. This legal agreement was necessitated by the child labor law violations, further complicating the recovery path for the diner chain.
The bankruptcy filing seeks to provide the company with a breathing space to reorganize and realign its operations amidst these multi-dimensional challenges. This restructuring under Chapter 11 implies that Hwy 55 is focusing on a strategy to stay operational while it attempts to settle its debts and revitalize its business model.
The community's reaction to the closures and the bankruptcy has been one of concern and nostalgia, remembering the brand's better days when it was a cornerstone of community gatherings and family outings.
In communities across the southern states, Hwy 55 was more than just a place to eat; it was a venue for local events and a symbol of American diner culture. The potential loss of additional restaurants weighs heavily on these towns, where local businesses are pivotal to the social and economic fabric.
As Hwy 55 navigates these challenging financial waters, stakeholders from employees to franchise owners hold their breath, hoping for a turnaround that will stabilize the beloved diner chain. The outcome of this bankruptcy process will likely have lasting implications not only for Hwy 55 but also for communities accustomed to its presence.
The future steps by Hwy 55 will be closely watched, as they endeavor to mitigate the operational challenges that triggered their current predicament. It is a pivotal moment for the chain, testing its resilience and adaptability in the increasingly competitive fast-food industry.
