Fazoli’s Closes 50 US Outlets as FAT Brands Restructures

Fazoli’s, an Italian quick-service restaurant chain, has closed 50 locations across the United States over the past nine months, significantly reducing its national presence. The closures follow a voluntary Chapter 11 bankruptcy filing by parent company FAT Brands Inc. in January 2026, driven by high debt levels and rising operational costs. Fazoli’s has exited the states of Alabama and West Michigan entirely, with significant reductions in Indiana and other regions. The chain now operates 142 locations nationwide, down from 192 in November 2025. FAT Brands sold its portfolio, including Fazoli’s, to FBG Bid Co. in June 2026 for $595 million.

The most recent closures include the final location in West Michigan, confirmed by a FAT Brands spokesperson on July 28, and a site in Lincoln, Nebraska, which shut on July 20. In May 2026, Fazoli’s closed two locations in Central Kentucky. Indiana has seen the steepest decline, losing 11 locations to leave 18 remaining. Several states, including California, Mississippi, North Carolina, Oklahoma, South Dakota, and Virginia, now operate with only a single Fazoli’s outlet.

FAT Brands Inc. filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas on January 26, 2026. The company cited a need to deleverage its balance sheet, which carried approximately $1.5 billion to $1.58 billion in debt from leveraged acquisitions. Prior to the bankruptcy filing, FAT Brands had already closed 32 locations across its portfolio, which includes brands such as Fatburger, Johnny Rockets, and Round Table Pizza.

In June 2026, FAT Brands secured new ownership through a $595 million credit bid by FBG Bid Co., an entity comprising some of the company’s previous bondholders. The transaction transferred 13 restaurant brands spanning more than 1,700 locations worldwide to the new owners. FAT Brands CEO Andy Wiederhorn stated that the Chapter 11 process would strengthen the capital structure to support long-term profitability and growth for the remaining concepts.

The restaurant industry faces widespread challenges, with over 90% of operators citing food, labour, insurance, energy, and swipe fees as major issues. In 2025, 42% of restaurant operators reported a lack of profitability. Italian restaurants specifically face high volatility in ingredient prices, particularly for wheat, cheese, and oils, which affects manufacturing costs and profitability. Despite these headwinds, Italian cuisine remains the most popular globally, edging out Chinese and Japanese options in surveys.

Fazoli’s, founded in Lexington, Kentucky, in 1988, peaked at 208 locations across 28 states. The chain differentiates itself with a quick-service model focused on drive-thru speed and lower average ticket prices compared to competitors like Olive Garden. The brand is known for its breadsticks, which are baked continuously in small batches, and its menu of pasta entrees, sub sandwiches, and salads.