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The Outback Steakhouse bankruptcy has sparked a lot of questions among restaurant workers – specifically, what happens to workers when a business goes into Chapter 11? Out West Restaurant Group is the franchisee of Outback locations in the western U.S., and Bloomin’ Brands has made an offer of approximately $26.3 million for its assets. Restaurants will be open, but concerns remain over wages and benefits.
Quick Facts
| Detail | What We Know |
| Filing | Chapter 11, Delaware |
| Franchisee | Out West Restaurant Group |
| Size | 61 restaurants in western states |
| Buyer | Bloomin’ Brands, which has offered approximately $26.3 million, is the top bidder so far. |
| Funding | Up to 60% financing available for purchase with 0% interest. Purchase financing up to 60% with 0% interest. |
| Wage priority | Possible up to $17,150 per worker for recent unpaid wages |
What the Outback Steakhouse Bankruptcy Means for Staff
The Outback Steakhouse Chapter 11 filing is a reorganisation and not an instant shutdown. Out West says it will continue to run, while Bloomin’ Brands says that its daily operations will not be immediately impacted. Franchisee locations are the only ones affected by the franchise owner’s bankruptcy. However, a judge’s review of the sale could be a very quick process during an Outback Steakhouse franchise bankruptcy.
How Safe Is Restaurant Workers Job Security Right Now?
Now, the changes go on, but in the long term it will depend on the approval of courts. But Rivals can outbid Bloomin’ Brands, and a new owner could retain the entire team, cut hours, or pursue restaurant franchise closures at lower-performing locations, resulting in restaurant employee layoffs or restaurant staff job losses. The Outback Steakhouse bankruptcy is the real proof of job security woes for many, and is reflective of the restaurant industry’s larger job security fears.
Wages, Paychecks and Compensation Claims
During bankruptcy, the wages of the workers are to be paid for work done. Under US bankruptcy law, unpaid employee wages earned in the 180 days leading up to the filing date take priority – up to $17,150 per employee. Keep pay stubs for staff to use in the court process for employee compensation claims. Final paycheck after restaurant closure follows state rules: such as in California, they must pay right after closing.
Benefits, Severance and Health Coverage
With an active plan from the employer, employee benefits are generally not terminated because of bankruptcy. When a plan is cancelled, employee health insurance during bankruptcy can be cut, but COBRA or a marketplace special period of enrollment can fill the gap. There is no guarantee of severance pay after the restaurant closes, except if it’s specified in a contract or a policy, but if the restaurant is part of a qualifying mass layoff, the WARN Act mandates giving employees 60 days’ notice. These are the foundation of the rights of employees in case of business closure and employee rights during bankruptcy.
What Should the Workers Do Now?
- Keep pay stubs, schedules and tip records.
- Keep an eye out for court notices and claim deadlines.
- Inquire about benefits in writing from HR.
- If pay is delayed, please contact your state labour department.
Make a small cushion; early planning is the key to financial security for restaurant workers.
Franchise protection in bankruptcy keeps creditors at bay, but workers’ rights are not wiped out in Chapter 11. Staffing up to Chapter 11 bankruptcy employee rights and franchise bankruptcy and employment rules early on will help employees act in time. Their bankruptcy is a reminder to check them this time round: Outback Steakhouse is going out of business.
FAQs
Will Outback Steakhouse’s bankruptcy force restaurants to shut down?
There is no closure that has been announced yet and results will be based on court approval.
Are workers losing unpaid wages when filing a franchise?
Not automatically. If a claim is submitted in time, recent unpaid wages will have priority status.
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