San Diego-based Outback Steakhouse franchisee files for bankruptcy

Out West Restaurant Group, a major franchisee of Outback Steakhouse based in San Diego, has filed for Chapter 11 bankruptcy protection in Delaware, according to News Radio 540 iHeart and other sources.

The company operates Outback Steakhouse locations across Arizona, California, Colorado, Nevada, and New Mexico. Its bankruptcy filing follows years of financial difficulties starting in 2018 and worsening during the pandemic, which caused a 35% drop in revenue.

Out West has accumulated nearly $320 million in secured debt and attempted to sell itself four times since 2018, closing several restaurants along the way. The company once operated as many as 100 Outback locations.

Bloomin' Brands, the parent company of Outback Steakhouse, has agreed to acquire 61 restaurants and most other assets from Out West for approximately $26.3 million, according to a Securities and Exchange Commission filing. Bloomin' Brands is also providing up to $5.5 million in debtor-in-possession financing to support Out West's operations during bankruptcy.

The acquisition agreement is a stalking horse bid that sets the minimum floor price for a court-supervised sale. Bloomin' Brands described the bankruptcy as an "isolated incident" that will not affect its corporate operations or financing and said it is working closely with Out West and other stakeholders to maintain stability in restaurant operations and support employees.

If the acquisition is successful, Bloomin' Brands could gain direct control of a majority of Outback's franchised locations, including those operated by Out West.

Out West was Bloomin' Brands' first franchisee and played a key role in expanding the Outback Steakhouse brand to the western United States.