Last week began with news that two more restaurant companies filed for bankruptcy: World of Beer, the once-fast-growing craft beer concept, and Buca di Beppo, the garish Italian chain. It’s been a common story this summer.

Sixteen restaurant companies have declared Chapter 11 this year, and several more are close to it, with closed stores or debt sold on secondary markets. Most of that carnage has happened over the past three months which, on top of weak traffic, makes it clear the restaurant industry is in a recession.

But it’s also a necessary reset, something the business needs every so often. A lot of restaurant chains went into the pandemic with too much leverage, either in the form of debt or costly leases.

Those brands need to be placed on a better footing and need some of that excessive leverage cleared from the books, one way or the other. That will be better for those companies, and potentially their investors. But it will also be better for the industry by clearing it of underperforming assets.

This week’s financial news
Welcome to Wall Street, Dutch Bros. The drive-thru beverage chain had a double beat and raise last quarter and its shops improved profitability despite a heavy presence in California. And then its stock plunged 20%.

Oh hey look a struggling company is turning to franchising. I get why U.K. operator Hostmore, which wants to buy TGI Fridays, plans to sell restaurants to franchisees. It needs to pay down debt and financing for such concepts isn’t exactly free-flowing right now. But if a brand doesn’t work for the company why would it work for franchisees?

KFC U.S. at one point was the country’s largest restaurant chain. Now it’s not even the largest bone-in chicken chain and the market is more or less a footnote on parent Yum Brands’ earnings. It’s sad.

Krispy Kreme’s plans are coming together nicely.

Noodles is the latest company planning unit closures. At least they’re not selling them to franchisees.

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