California-based restaurant chain operator files for bankruptcy as it blames state’s brutal wage laws

Cerca Trova Restaurant Group, a San Diego-based franchisee that operates 61 Outback Steakhouse locations across five states, primarily in California, filed for Chapter 11 bankruptcy on November 4, 2026. The company cited escalating labor and food costs and declining customer traffic as major factors in its financial struggles since the onset of the COVID-19 pandemic. Cerca Trova's debt burden totals $449 million.

California’s minimum wage increase to $16.90 per hour, effective January 2026, contributed significantly to labor costs for Cerca Trova, which employs more than half its workforce in California. More than half of the company's restaurants are located in California, where minimum wages have been rising.

In response, Bloomin’ Brands, Outback Steakhouse’s parent company, has agreed to a $26.3 million deal with Cerca Trova for the acquisition of these struggling restaurants, aiming to mitigate disruption for customers and employees during bankruptcy proceedings. This move is seen as an effort by Bloomin’ Brands to directly control over half of its U.S. franchised Outback Steakhouse locations.

The filing reflects ongoing challenges in California's restaurant industry due to rising operational costs and regulatory pressures.