61-Unit Outback Franchisee Files Chapter 11; Bloomin' Bids $26.3M

Outback Steakhouse franchisee Out West Restaurant Group, operator of 61 restaurants in the western U.S., filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware. Parent company Bloomin' Brands signed an asset purchase agreement Sunday with a starting price of $26.3 million, subject to adjustments and the assumption of certain liabilities.

The deal is not closed. It is a starting point.

The agreement positions Bloomin' to serve as stalking horse bidder, pending court approval. That role sets the initial offer for the assets, but competing buyers can submit higher or otherwise better proposals through the court-supervised sale process. An auction could follow if qualified competing bids emerge. Any sale to Bloomin' requires court approval and satisfaction of other conditions in the purchase agreement.

Who pays to keep the lights on?

Bloomin' also agreed to provide up to $5.5 million in interest-free financing to support Out West during the bankruptcy proceedings. The money would cover operating expenses and the professional and administrative costs tied to the Chapter 11 case. Access is not unconditional. Drawdowns are limited to situations in which operating cash is insufficient to maintain a minimum level of liquidity.

During the case, Out West plans to continue paying newly incurred franchise fees and royalties owed to Bloomin', along with rent under leases the franchisor guarantees. The company said the filing does not immediately affect restaurant operations. Out West intends to keep operating and has asked the court for permission to pay certain employee, vendor, supplier and other obligations incurred before its petitions.

Bloomin' framed the transaction as protective rather than opportunistic. The company said securing the restaurants would provide direct operational insight, allow investments through its development initiatives, and help limit disruption to guests and employees.

Each of those claims deserves scrutiny. Direct insight and development investment are promises, not commitments with dollar figures attached. What is concrete: the acquisition would hand Bloomin' direct control of the franchisee's restaurant assets if it closes, converting 61 franchised locations into company-held property.

How long has this been building?

Out West's payment problems predate the filing by more than two years. In December 2023, Bloomin', the franchisee and its lenders reached an agreement to delay payments and hold off on enforcing certain rights tied to earlier defaults.

That agreement carried a trigger. A bankruptcy filing would have required repayment of amounts owed to Bloomin' and substantial sums owed to lenders, with lenders paid first. The actual filing put those provisions on hold, leaving the parties' rights to be resolved in court rather than by contract.

Out West is formally known as Cerca Trova Restaurant Group Holdings. Its financial troubles date back years, according to the original report on FSR.

The structure of the deal leaves several questions open. The final purchase price depends on adjustments and assumed liabilities the filing does not quantify. Whether competing bidders emerge will determine whether Bloomin' pays $26.3 million or more. And the court must still weigh the interests of lenders whose repayment trigger is now suspended.

For Bloomin', the calculation is straightforward. A $26.3 million bid plus up to $5.5 million in financing buys continuity across 61 western U.S. locations and removes a distressed franchisee from its system. For lenders and unsecured creditors, the outcome now rests on the Delaware court's calendar and the auction process the filing sets in motion.