On June 22, the Women in Restructuring podcast featured Mariaelena Gayo-Guitian in an interview regarding the recent trends in franchise bankruptcies and the strategies businesses can use to successfully restructure.
In the episode, Gayo-Guitian explained that franchise operators are facing mounting financial pressures driven by higher labor costs, increased food and supply expenses, and shifts in consumer behavior. “There’s been a spike in franchise bankruptcies, and that’s been due in part to a jump in labor costs,” she said. “The margins generally in a franchise or restaurant overall are thin, and with just an increase in labor costs, food and supply costs, those thin margins become razor thin and have caused a disruption in that field.”
Addressing how franchise restructurings can succeed, Gayo-Guitian emphasized the importance of preparation and strategic planning before a bankruptcy filing. “There’s definitely a playbook, and it starts with, in my opinion, being honest with your client as to what parts of the business are actually working and which are not,” she said. “The biggest factor in the playbook is preparation. You have to really have an exit strategy before you file a bankruptcy, because a bankruptcy is a tool that you execute, but you need to figure things out ahead of time.”
Access the episode here.