Is Popeyes in trouble? Major fast-food franchisee behind 130 Chicken restaurants files for bankruptcy
Popeyes Louisiana Kitchen franchisee files for Chapter 11 bankruptcy. Image Source: Shutterstock
A major fast-food restaurant franchisee operating more than 130 fried chicken locations has filed for Chapter 11 bankruptcy, highlighting the growing financial strain facing even high-performing segments of the U.S. fast-food industry.
Sailormen Inc., one of the largest domestic franchise operators of Popeyes Louisiana Kitchen, filed its bankruptcy petition on January 15 in the U.S. Bankruptcy Court for the Southern District of Florida. The filing lists $100 million to $500 million in assets and liabilities, marking one of the most significant fast-food restructurings of early 2026.
Fried Chicken Chains Thrive, But Franchisees Struggle
The bankruptcy comes at a paradoxical moment for the fast-food sector. According to market research firm Circana, customer traffic to fried chicken chains rose 3% in 2025, outperforming all other fast-food categories, which collectively saw a 1% decline.
Chicken concepts also posted strong growth in 2024, buoyed by consumer demand for customizable meals, sauces, and perceived value. Industry analysts say brands like Popeyes, Chick-fil-A, Raising Cane’s, and KFC continue to dominate fast food due to menu flexibility and experience-driven dining.
Yet despite rising customer traffic, franchise operators are grappling with inflation, labor shortages, rent obligations, and heavy debt loads, pushing several into bankruptcy court.
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What Went Wrong for Sailormen Inc.?
Founded in 1987, Sailormen grew from just 10 locations into a powerhouse operator with over 136 Popeyes restaurants across Florida and Georgia, employing approximately 2,900 workers.
However, court filings and industry reports reveal a series of cascading setbacks:
- A failed attempt to sell 16 Georgia locations for roughly $1 million
- Defaults on credit facilities totaling about $130 million
- Multiple lawsuits, including disputes with vendors and landlords
- Lease guarantees tied to closed stores, draining cash flow
As liquidity tightened, lender BMO Bank N.A. sought to place the company into receivership in early January, prompting Sailormen to file for bankruptcy to halt the process and stabilize operations.
Rising Costs and Inflation Hit Margins Hard
Sailormen reported $233.5 million in sales but still posted an $18.8 million net operating loss, driven largely by rising labor and food costs. The company cited lingering impacts from the COVID-19 pandemic, inflation, and declining margins as key contributors to its financial distress.
Bank filings indicate the company was at risk of running out of cash, even as customer demand for fried chicken remained strong.
Will Popeyes Restaurants Close?
While the bankruptcy filing has raised concerns among customers, Popeyes corporate leadership says many Sailormen-operated locations are expected to remain open.
Popeyes U.S. President Peter Perdue stated that the brand is supporting the franchisee throughout the restructuring process and expressed confidence in its operational leadership.
The Chapter 11 filing allows Sailormen to continue operating while restructuring debt, potentially selling assets and renegotiating leases rather than shutting down entirely.
A Broader Fast-Food Bankruptcy Trend
Sailormen is not alone. Other fried chicken operators, including franchisees of Southern Classic Chicken and Harold’s Chicken, filed for bankruptcy protection in 2025, underscoring the fragile economics of franchising despite strong consumer demand.
Experts say the trend reflects a widening gap between brand-level success and franchise-level profitability, especially for operators carrying heavy debt from expansion efforts.
FAQ
Why did the Popeyes franchisee file for bankruptcy?
Sailormen Inc. cited failed restaurant sales, rising inflation, labor costs, lawsuits, lease obligations, and defaults on $130 million in credit facilities.
Are Popeyes restaurants closing because of this bankruptcy?
Some locations may close, but many are expected to remain open as the franchisee restructures under Chapter 11 protection.
How many Popeyes locations does Sailormen operate?
Sailormen operates more than 130 Popeyes restaurants across Florida and Georgia.
Does this bankruptcy affect Popeyes as a brand?
No. Popeyes Louisiana Kitchen itself has not filed for bankruptcy. The filing only affects one franchise operator.
What is Chapter 11 bankruptcy?
Chapter 11 allows companies to reorganize debt and continue operating while restructuring their business under court supervision.
Is the fast-food industry struggling in 2026?
While customer traffic remains strong, especially for chicken chains, many franchisees are struggling with debt, inflation, and operating costs.
Could more fast-food bankruptcies happen?
Industry analysts say more filings are possible, particularly among heavily leveraged franchise operators facing rising expenses.