Bloomin’ Bankruptcy: San Diego Outback Franchisee Files Chapter 11, Blames California Labor Costs

A major California-based Outback Steakhouse franchise operator has filed for Chapter 11 bankruptcy protection, pointing to the California’s soaring labor costs, rising food prices, and declining customer traffic as key factors that pushed its restaurant empire to the brink.

San Diego-based Cerca Trova Restaurant Group, also known as Out West Restaurant Group, filed for bankruptcy Monday in Delaware, seeking relief from a staggering $449 million debt burden, according to reporting by the New York Post. The company operates 61 Outback Steakhouse locations primarily across California, Arizona, Colorado, Nevada, and New Mexico, with the majority of locations and employees concentrated in California. “By 2026, the pressures on the business had converged,” CEO David Goronkin said in court documents. “Guest traffic and earnings continued to decline, while food, labor, and other production costs continued to rise.”

Debt has ballooned from roughly $269 million in late 2020. Beef prices have climbed as much as 5% a year since 2022, which is a problem when your signature product is steak.

Yet, California’s statewide minimum wage hit $16.90 an hour in January, while the fast-food sector has been living with the $20 mandate since 2024. Outback is not technically subject to the fast-food rate, but when more than half your workforce is in the state that has turned wage policy into a competitive sport, the payroll still bites. 

Parent company Bloomin’ Brands has stepped up as the opening bidder at $26.3 million for the assets and is providing up to $5.5 million in financing to keep the lights on. A spokesperson called it an “isolated situation” that does not affect Bloomin’ Brands’ own operations. 

The filing, however, is not an isolated situation” in the once-Golden State. California’s restaurant and business sector has been absorbing one regulatory and cost hit after another. 

Federal data showed the state lost more than 36,000 fast-food jobs after the $20 wage law took effect. Rubio’s Coastal Grill closed 48 California locations. Jack in the Box announced plans to shutter 150–200 restaurants. A large Carl’s Jr. franchisee, Friendly Franchisees Corporation, also landed in Chapter 11 and pointed to the same $20 wage as a major contributor. 

When operators in the industry that serves the most price-sensitive customers keep telling the same story, it stops being a coincidence. The Globe has tracked a steady stream of companies deciding the state’s taxes, regulations, energy costs, and political climate are no longer worth the trouble.

 KB Home is moving its headquarters from Los Angeles to Tempe, Arizona. Yamaha Motor Corporation, U.S.A. is leaving Cypress for Kennesaw, Georgia, after more than 50 years. Public Storage left Glendale for Texas. In-N-Out shifted significant operations toward Tennessee. Chevron, Oracle, Hewlett Packard, Charles Schwab, SpaceX, X/Twitter, Toyota Motor North America, Leprino Foods, Blue Diamond Growers, and Anheuser-Busch have all reduced or exited California, often citing high operating costs and the cumulative weight of compliance.

Hoover Institution researchers have documented hundreds of headquarters relocations out of the state in recent years. For labor-heavy businesses, California’s combination of elevated wages, inflation, commercial rents, and regulatory overhead continues to squeeze margins until the math no longer works. 

Outback’s old slogan was “No Rules, Just Right.” California Democrats said, “Hold my beer” and went the opposite way: too many rules, too many regulations, too many wage mandates. The result?  Just wrong. For years they have piled on higher labor costs, thicker compliance, and thinner margins onto businesses. Their latest victim is Cerca Trova.