Operations

Moe's Southwest Grill franchisee files for Chapter 11 bankruptcy

Photo: Moe's

August 10, 2026

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Moe's Southwest Grill franchisee Quality Fresca filed for Chapter 11 bankruptcy protection Aug. 4 in the U.S. Bankruptcy Court for the Southern District of Florida.

The company said the filing stems from a sustained, post-pandemic decline in foot traffic that reduced revenue without a matching drop in rent, debt payments and other fixed costs. Rising shipping and food costs, labor shortages and inflation added further pressure, and continued cost increases and competition pushed EBITDA lower in 2025. While part of the portfolio stayed profitable, other locations lost money, leaving the company unable to meet its obligations.

Quality Fresca reported net sales of $58.9 million for fiscal year 2025 against negative consolidated EBITDA of $111,204. As of Dec. 31, 2025, its balance sheet showed about $44 million in assets against roughly $52 million in liabilities. Through June 15, 2026, year-to-date revenue was $26.4 million, with EBITDA of $315,254.

Before filing, the company amended its credit agreement 11 times between May 2021 and December 2025 to pare down debt, and closed 19 underperforming restaurants over that span, cutting its portfolio from 69 locations to 50 by year-end. Twelve more closures since then leave 38 restaurants operating as of the filing.

How we got here

The credit agreement dates to March 2020, when Quality Fresca acquired 67 Moe's locations, and originally totaled $37 million, secured by nearly all of the company's assets. PNC served as administrative agent and sole secured lender from June 2021 until on or about May 5, 2026, when it sold and assigned the agreement to GR Loanco 1 LLC, an affiliate of Quality Fresca's parent company. GR Loanco then extended a $700,000 second-lien loan and a $100,000 third-lien loan. Quality Fresca entered bankruptcy with about $16 million in secured debt, all held by the affiliated lender, plus about $2.1 million in trade payables to landlords, vendors, suppliers and taxing authorities.

The company's relationship with its franchisor also grew strained. Each restaurant operates under an agreement with Moe's Franchisor SPV LLC, an affiliate of GoTo Foods, which licenses the Moe's name in exchange for royalties and advertising fees. The franchisor declared Quality Fresca in default under all of its franchise agreements on Aug. 5, 2025. The two sides signed an addendum in September 2025 deferring certain amounts owed, which has since expired. Management began negotiating with PNC and GoTo Foods in early 2026 over liquidity, closures and fee relief; those talks remain ongoing.

As of press time, GoTo Foods had not returned a request for comment.

G. Michael Verdisco of Gulf Atlantic Capital Corporation was appointed chief restructuring officer July 9, 2026, reporting to independent manager Joseph J. Luzinski.

Quality Fresca said its goal is to exit unprofitable locations and emerge with a smaller, self-sustaining footprint, through reorganization or a sale. Along with its petition, the company moved to reject certain unexpired leases and sought approval for a $1.6 million delayed-draw debtor-in-possession loan from GR Loanco 1 LLC — the same affiliated lender that holds its prepetition debt. The loan provides an initial $250,000 advance, upsizable to $500,000, carries 12% interest plus a 1.5% fee, and matures no later than Feb. 26, 2027, secured by liens ranking ahead of the lender's existing position.

The company also filed first-day motions covering wages and benefits for its roughly 603 employees, insurance, taxes and cash management, and is seeking to retain Gulf Atlantic Capital as CRO, Kroll Restructuring Administration as claims agent, and Jordi Guso of Berger Singerman as counsel. No creditors' committee, trustee or examiner has been appointed.

Quality Fresca reported $1 million to $10 million in assets and $10 million to $50 million in liabilities and said funds will be available for distribution to unsecured creditors.