There’s growing concern over the future of Shari’s, a beloved restaurant chain famous for its award-winning pies.
Once a staple with around 100 locations spanning the Pacific Northwest, California, and Idaho, the chain now finds itself with just 60 restaurants.
Recent months have seen the closure of seven more sites, intensifying fears about its stability.
Financial Struggles and Legal Troubles
The closures come in the wake of serious financial and legal issues.
Reports indicate that Shari’s is struggling with unpaid bills and significant back taxes.
The Washington State Department of Revenue has issued nearly $1.3 million in tax warrants against the company, and at least 11 debt collection cases have been filed in the state since 2020.
Additionally, Shari’s owes Idaho about $220,000 in back taxes, with six liens placed against its management company.
To make matters worse, Shari’s has faced eviction notices from landlords due to unpaid rent, with one property owner in Kitsap County, Washington, claiming over $150,000 in arrears.
The chain is also reported to owe six-figure sums to other service providers, including those for construction, plumbing, and marketing.
Impact on Local Businesses
Sarah Thomas, president of Charlton Marketing, shared with local news that Shari’s owes her agency more than $100,000.
Thomas noted that the debt has forced her to lay off staff and reevaluate her financial situation.
“I don’t know how much money that means to them, but to us it means a lot,” she told KGW 8.
Challenges Facing the Restaurant Industry
Retail experts aren’t surprised by Shari’s struggles.
Aaron Allen, founder of the global restaurant consulting firm Aaron Allen & Associates, explained that full-service restaurants have been hit hard by rising labor, food, and rent costs since the pandemic.
“All three of those have gone up at rates that are faster than what they’re able to increase their menu prices,” Allen said.
While he doesn’t predict an immediate shutdown of Shari’s remaining locations, he does foresee a gradual pullback from the market.
Broader Industry Struggles
Shari’s isn’t alone in facing difficulties.
The Mediterranean chain Roti recently filed for Chapter 11 bankruptcy, while Italian favorite Buca di Beppo closed 13 underperforming locations and also sought bankruptcy protection.
Red Lobster and Rubio’s, a Mexican chain, both filed for bankruptcy and shut numerous locations earlier this year.
BurgerFi, an upmarket fast-food chain, and Hooters have also closed multiple restaurants, citing soaring costs.
As the restaurant industry grapples with increased running costs and inflation-weary diners, the big question remains: what’s next for Shari’s and others facing similar challenges?
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