Outback Franchisee Bankruptcy: Bloomin' Bids for 61 Units

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Outback Steakhouse's largest U.S. franchisee, Out West Restaurant Group (legally Cerca Trova Restaurant Group Holdings), filed for Chapter 11 in Delaware on November 2, 2026. A day earlier, Outback's parent, Bloomin' Brands, signed a $26.3 million agreement to buy its 61 restaurants. This Outback franchisee bankruptcy is bigger than one operator: if the sale closes, Bloomin' takes back more than half of Outback's 113 U.S. franchised restaurants, from a group that bought 45 company-owned Outbacks from Bloomin' in 2017.

What Bloomin' and Out West have confirmed so far

The filing landed in the U.S. Bankruptcy Court for the District of Delaware on Monday, November 2. Chapter 11 is the reorganization chapter of the Bankruptcy Code: the debtor keeps operating while the court supervises a restructuring or sale.

Bloomin' signed the asset purchase agreement on Sunday, November 1, for substantially all of Out West's assets. The $26.3 million is a starting price, subject to adjustments and the assumption of certain liabilities, according to FSR magazine. Bloomin' is the stalking-horse bidder, meaning its offer sets the floor. Other buyers can submit higher or better bids, an auction may follow, and the court has to approve any sale.

Bloomin' also agreed to provide up to $5.5 million of financing during the case. Restaurant Dive describes it as debtor-in-possession (DIP) financing, the loans that keep a Chapter 11 debtor running, with a matching reduction in the purchase price. FSR reports the money is interest-free and can be drawn only when operating cash falls below a required minimum.

Bloomin's third-quarter release on November 6 gives the system baseline. At September 27, 2026, Outback had 544 company-owned and 113 franchised U.S. restaurants. Franchised units fell from 115 during the quarter, with two closures and no openings. Out West then closed 10 restaurants between October 11 and October 25 and asked the court to reject those leases on filing day, per Men's Journal's review of court documents. Those 10 aren't part of the sale, and they closed after the 113 count was taken.

On the November 6 earnings call, CEO Mike Spanos called the situation "specific to Out West." CFO Eric Christel said the company doesn't expect a material impact on fourth-quarter results. Both are company statements.

Out West's own account, as reported by Inc. from court filings, is longer. It says it borrowed to expand in the mid-to-late 2010s, couldn't repay loans due in April 2022, and has operated under forbearance agreements (lender promises not to enforce defaults for a period) since then while carrying nearly $320 million of secured debt. FSR reports that in December 2023, Bloomin', the franchisee and its lenders agreed to defer payments and hold off on enforcing earlier defaults. Inc. also reports four failed attempts to sell the company since 2018. Treat these as the debtor's characterization until the first-day filings are fully tested.

Why the Outback franchisee bankruptcy is an Item 20 and Item 21 story

Start with concentration. One operator held 61 of 113 U.S. franchised Outbacks. That's a franchise system where a single borrower's credit file is most of the franchised P&L. Item 20 of the Franchise Disclosure Document lists every franchisee with outlet addresses, so concentration like this is visible before anyone files anything. You just have to count by operator instead of by state.

Then look at the outlet tables. Item 20 Table 3 reports outlets "reacquired by franchisor" each year. If Bloomin' closes this deal, Outback's next FDD will show a reacquisition count in the dozens, all from one seller in five Western states. A reader who sees that number without the backstory could mistake a rescue for a franchisor cherry-picking its best stores. Reading several years of state-level Item 20 data side by side, as you can by pulling prior filings from the GetFDD franchise directory, keeps one year's spike in context.

Item 21 is where the franchisor's exposure sits. FSR reports that Out West intends to keep paying rent on leases guaranteed by Bloomin' and to keep paying new royalties during the case. The 2023 forbearance also made Bloomin' a creditor. For a public parent, those details show up in the 10-K. For a private franchisor, the audited statements attached as Item 21 are often your only window into lease guarantees and notes receivable from franchisees.

The 2017 deal adds a twist. Bloomin' refranchised the four-state Western market to this operator, and by the end of 2018 the operator couldn't meet its obligations, per the Inc. account. Refranchising (selling company-owned units to franchisees) gets pitched as capital-light growth. It moves operating risk, but the franchisor often keeps contingent exposure through the leases it guaranteed. We made a similar point in our breakdown of Burger King's refranchising pace.

What to examine next in Outback's FDD and similar systems

  1. Item 20, Table 3 by state. For Arizona, California, Colorado, Nevada and New Mexico, track "reacquired by franchisor" and "ceased operations" for the fiscal years that cover this case. Check whether the 10 October closures appear as franchised closures.
  2. Item 20 franchisee list. Compute the share of franchised units held by the largest operator. Above roughly a third, we'd treat that operator's credit as system risk.
  3. Item 20 former-franchisee list. Franchisees who left the system in the last fiscal year are listed with contact information. After a large reacquisition, that list is a ready-made reference-call sheet.
  4. Item 21 footnotes. Look for lease guarantees, franchisee notes or receivables, bad-debt reserves and any forbearance or deferral arrangements.
  5. Item 19, if one is provided. If the financial performance representation splits company and franchised units, 61 restaurants switching sides can move the averages. Check what population the figures cover.

What we don't know yet about the Out West sale

  • Whether any competing bid shows up. The $26.3 million is a floor, not a final price.
  • Which liabilities Bloomin' assumes, and how the secured lenders are treated in the sale order.
  • Whether Bloomin' reopens any of the 10 closed restaurants. Fast Company asked, and Bloomin' hadn't answered as of Men's Journal's November 5 report.
  • Whether Bloomin' keeps the units company-owned or refranchises them again later. Spanos said more detail will come on the next earnings call, and he expects the process to take a couple of months.

What a $26.3 million buyback tells diligence teams

Headline math puts the bid around $431,000 per restaurant before adjustments and assumed liabilities. That's a rough figure, not a valuation. What matters more for buyers, lenders and brokers is the sequence: a 2017 refranchising, trouble meeting obligations by the end of 2018, forbearance from 2022, and a franchisor that ends up as both stalking horse and DIP lender while still standing behind guaranteed leases. Several steps in that sequence can leave traces in Items 20 and 21 long before anything reaches a courtroom. For another version of the same pattern, see our coverage of the Wendy's franchisee bankruptcy fight over 314 units.

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