Bloomin' Brands to Buy Outback Franchisee in Chapter 11
Out West Restaurant Group filed Chapter 11 as Bloomin' Brands agreed to buy 61 Outback Steakhouse locations in a planned, court-supervised sale.
A Coordinated Filing, Not a Surprise Collapse
Sixty-one Outback Steakhouse restaurants across the western United States now sit at the center of a bankruptcy case that was negotiated before it was ever filed. Out West Restaurant Group, operating formally as Cerca Trova Restaurant Group Holdings, filed for Chapter 11 protection on a Monday in the U.S. Bankruptcy Court for the District of Delaware. On the same timeline, Bloomin' Brands, parent company of the Outback Steakhouse brand, agreed to purchase substantially all of Out West's assets through a sale process the bankruptcy court will supervise. The pairing of these two announcements, filing and purchase agreement arriving together, tells you this was a planned handoff rather than a company caught flat-footed by its own finances.
A Year of Warning Signs Before Court Intervention
The strain had been building for some time. Back in December 2023, Bloomin', Out West, and the franchisee's lenders struck a forbearance deal, agreeing to delay payments and pause enforcement actions tied to earlier loan defaults. That agreement carried a sharp trigger clause: any bankruptcy filing would immediately activate repayment obligations, with Bloomin' owed money alongside the lenders, and the lenders positioned to get paid first.
The Chapter 11 filing flipped that script. Instead of setting off the contractual repayment chain, it suspended it, moving the question of payment priority out of a private agreement and into the bankruptcy court's hands. A forbearance deal followed roughly a year later by a court filing is not the profile of a sudden collapse. It is the profile of a franchisee managing financial pressure for well over a year before court intervention became the only remaining option.
Restaurants Stay Open While Ownership Shifts
Bloomin' has said the filing will not immediately disrupt restaurant operations, and Out West intends to keep its locations open throughout the Chapter 11 process. The company has asked the court for permission to pay certain pre-petition obligations owed to employees, vendors, and suppliers, a routine step meant to keep daily operations intact while the case works through the system.
Out West also plans to stay current on newly incurred franchise fees and royalties owed to Bloomin', along with rent on leases Bloomin' has guaranteed. Both companies appear intent on avoiding the kind of operational chaos that can follow a bankruptcy filing, protecting continuity for guests and staff even as ownership underneath the restaurants gets restructured.
A $26.3 Million Starting Price With Guardrails
The purchase agreement, signed the Sunday before the filing, sets a starting price of $26.3 million, though that figure is not locked in. It remains subject to adjustments and the assumption of certain liabilities as the sale moves through court.
Bloomin' has also committed up to $5.5 million in interest-free financing to keep Out West's operations funded during the proceedings, but the money comes with guardrails: Out West can only draw on it when operating cash falls below a minimum threshold, and funds are earmarked specifically for operating expenses and for professional and administrative costs tied to the case itself. That narrow structure reads less like a bailout and more like a safety net, built to catch a specific kind of cash shortfall rather than fund anything open-ended.
Setting the Floor Without Sealing the Outcome
Bloomin's role here carries a specific legal label: stalking horse bidder, a status that still needs court approval before it becomes official. Serving as stalking horse means Bloomin' sets the floor price against which other bidders could compete, but it does not guarantee the company walks away as final buyer.
Other interested parties remain free to submit stronger offers, and if qualified bids materialize, the process could shift toward a full auction. Even if Bloomin' stays the buyer, closing the deal, whether at $26.3 million or some revised number, still requires formal court approval and compliance with other conditions baked into the purchase agreement. It is a position that gives Bloomin' a financial foothold and favorable footing without sealing the outcome in advance, since the marketplace technically stays open to rivals until the court names a buyer.
61 Restaurants Could Shift to Direct Control
Should the deal close as structured, Bloomin' would take direct control of all 61 restaurants now operated by Out West, shifting them from franchised locations into company-owned assets. The company has pointed to the upside of that shift: firsthand operational visibility into these restaurants, access to investment through its existing development initiatives, and less disruption for guests and employees than a messier ownership transition might bring.
It is a sizable, geographically concentrated cluster to absorb, and it hands Bloomin' hands-on management over a meaningful slice of its western footprint, territory it had previously entrusted to an independent operator that turned out to be financially unstable.
A Test Case for Managing Franchisee Distress
What plays out in Delaware over the coming months will say something about how major franchisors handle a struggling operator without letting the fallout spread unpredictably across a brand's restaurants, workers, and guests. By positioning itself as both lender and prospective buyer, Bloomin' is steering the outcome rather than leaving it to the open market, while still leaving room for a court-run auction if other bidders step forward.
Whether the final number holds at $26.3 million or moves through adjustments and competing offers is a question only the bankruptcy process will answer. For now, the plan is continuity: restaurants staying open, employees staying paid, and a brand choosing to absorb the risk directly rather than watch a franchisee's financial trouble ripple through an entire region.