Razzoo's, Inc. and affiliate Razzoo's Holdings, Inc. filed voluntary Chapter 11 petitions on October 1, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division (First Day Declaration ¶ 3, Dkt. No. 16). The cases are jointly administered under case number 25-90522. According to the First Day Declaration, the filing followed sustained sales pressure in the casual dining sector, burdensome lease obligations totaling approximately $650,000 monthly, and an inability to continue servicing approximately $9.65 million in secured debt (First Day Declaration ¶¶ 12-13, 15, 10, Dkt. No. 16). The debtors seek to stabilize operations and pursue sale or financing transactions to reorganize while maintaining their 20 remaining locations (First Day Declaration ¶¶ 6, 18, Dkt. No. 16).

The 34-year-old Texas-born restaurant chain, celebrated for its "unapologetically Cajun" identity, represents another casualty in the intensifying restaurant industry restructuring wave that has challenged mid-sized regional chains facing aggressive competition from national value-oriented operators.

Case Snapshot

Source: First Day Declaration of Philip Parsons, CEO ¶¶ 5-8, 10, 11, 15 (Dkt. No. 16)

Key Case Milestones

Source: Notice of Commencement (Dkt. No. 43)

Operating Footprint and Recent Actions

Razzoo's is a regional casual-dining brand founded in 1991 in Dallas, Texas, with a core footprint concentrated in the Dallas-Fort Worth metroplex and prior expansion into North Carolina and Oklahoma. The company grew methodically over three decades, reaching a peak of 24 restaurants before initiating strategic contraction. In 2024–2025, management closed four underperforming locations—one in 2024 and three in September 2025 (Pasadena, TX; Corpus Christi, TX; Oklahoma City, OK)—to reduce cash burn and address lease losses. After these closures, the debtors operate 20 locations across Texas and North Carolina (First Day Declaration ¶¶ 5-6, Dkt. No. 16). Management estimates recurring monthly rent obligations decreased by approximately $110,000 following the prepetition exits, with further lease-rightsizing under consideration during the cases (First Day Declaration ¶ 16, Dkt. No. 16).

The debtors report a longstanding culture and operating model centered on Cajun cuisine, rooted in the company's "6-2-101" mindset encompassing six core values and a commitment to guest service (First Day Declaration ¶ 7, Dkt. No. 16). However, this specialized identity created operational vulnerabilities. The business model exhibits significant seasonality tied to crawfish availability and pricing. In 2025, increased competition for crawfish supply depressed retail selling prices and contributed to a year-over-year sales decline during what should have been peak season. This commodity exposure, combined with the company's niche positioning, limited management's flexibility to pivot toward the value-oriented promotions that have driven traffic for larger competitors (First Day Declaration ¶ 14, Dkt. No. 16).

Liquidity and Capital Structure

Prepetition financing was provided under a credit agreement with First Horizon Bank, a financial institution with specialized expertise in restaurant finance and over 160 years of lending experience. The credit facility was amended multiple times through September 2024, reflecting ongoing negotiations and covenant modifications (First Day Declaration ¶ 10, Dkt. No. 16). In September 2024, outstanding principal stood at approximately $11.93 million. By the petition date, the balance was reduced to approximately $9.65 million (consisting of $9.57 million in principal and $79,264 in accrued interest), reflecting accelerated amortization and $850,000 in shareholder contributions to pay down the debt. The obligations are secured by substantially all assets of both debtor entities (First Day Declaration ¶¶ 10, 17, Dkt. No. 16). The debtors also estimate approximately $3.1 million of unsecured trade obligations owed to various vendors and landlords (First Day Declaration ¶ 11, Dkt. No. 16).

Court filings reveal the concentration of unsecured claims among landlords for closed or underperforming locations. The largest prepetition creditors identified in the Schedules of Assets and Liabilities include:

The landlord concentration underscores the fixed-cost burden created by legacy lease commitments at locations that subsequently failed to perform, a recurring theme in asset-light restaurant restructurings.

Lease liabilities represent a material fixed cost because Razzoo's does not own any real estate, operating instead under long-term lease agreements for all 20 locations. Aggregate monthly rent approximates $650,000 across the store base, translating to approximately $7.8 million in annualized lease obligations. This "asset-light" approach, while reducing upfront capital requirements during growth phases, created inflexible fixed costs that consumed a disproportionate share of declining cash flow as sales deteriorated (First Day Declaration ¶ 15, Dkt. No. 16).

Immediately before filing, the debtors projected a ~$500,000 principal-and-interest sweep due October 1, 2025, under the First Horizon facility. Facing increasingly dire financial circumstances, management concluded the payment was not feasible while maintaining operations and preparing a comprehensive restructuring; the petitions were filed the same day (First Day Declaration ¶ 18, Dkt. No. 16).

Factors Leading to Chapter 11

Management cites several converging drivers that created an untenable operating environment. First, shifting consumer behavior toward convenience, delivery, and lower price points fundamentally altered the casual dining landscape. Post-pandemic diners increasingly prioritize value over experiential dining, particularly as inflation and higher interest rates compressed discretionary household budgets. This industry-wide phenomenon forced many consumers to "trade down" from casual dining to fast-casual or quick-service alternatives, reducing overall traffic to sit-down restaurants (First Day Declaration ¶ 13, Dkt. No. 16).

Aggressive discounting and marketing by national casual-dining chains created acute competitive pressure. The First Day Declaration explicitly identifies Chili's and Applebee's as competitors whose "heavy media presence" and "value-oriented promotions" negatively influenced Razzoo's guest traffic (First Day Declaration ¶ 13, Dkt. No. 16). Chili's, in particular, has found considerable success with its "3 for Me" deal, offering a non-alcoholic beverage, appetizer, and full-sized entrée starting at $10.99. The chain's chief marketing officer emphasized that these combos deliver "better quality," "bigger portions," and "more variety than what you'll find in fast food," positioning Chili's to capture value-conscious diners across both fast-casual and traditional casual dining segments. Similarly, Applebee's deployed bundled "2 for $25" deals and periodic "All You Can Eat" promotions to drive traffic. These well-capitalized competitors leveraged national advertising budgets and operational scale that Razzoo's, as a 20-unit regional player, could not match (First Day Declaration ¶ 13, Dkt. No. 16).

The combination of seasonality tied to crawfish markets and intensifying competition for value-oriented customers amplified these pressures. These conditions, together with fixed lease obligations and secured debt service, outpaced the company's cost-saving actions and precipitated the filing (First Day Declaration ¶¶ 13-14, Dkt. No. 16).

In response to deteriorating performance, the company implemented cost-saving initiatives prepetition, including a reduction in force estimated to deliver approximately $1 million of year-over-year savings in 2025, and supply chain optimization yielding approximately $1 million in savings across 2024 and 2025 combined (First Day Declaration ¶ 14 n.4, Dkt. No. 16). Management also closed four underperforming locations to reduce lease burn. While these actions demonstrated proactive management, they proved insufficient to offset sustained traffic softness and the weight of fixed costs (First Day Declaration ¶¶ 5, 14, Dkt. No. 16).

Debtor-in-Possession Financing

The debtors moved quickly to secure DIP financing to stabilize operations during the restructuring. Initially, the company proposed a facility with third-party lender TJF Financial LLC, which would have provided approximately $1 million in interim financing and up to $4 million total. However, following negotiations with stakeholders, First Horizon Bank—the debtors' existing prepetition secured lender—stepped in to provide the DIP facility. On October 7, 2025, the bankruptcy court entered an Interim DIP Order authorizing up to $3.3 million in new-money financing, with an initial draw of $1.8 million available immediately to fund near-term operational needs (Interim DIP Order, Dkt. No. 60; Law360, Oct. 7, 2025).

The shift from TJF Financial to First Horizon Bank simplified the capital structure by keeping the DIP and prepetition debt under the same lender, reducing intercreditor complexity and potentially streamlining any future exit financing or sale transaction. A final hearing on the DIP motion was scheduled for November 4, 2025, to authorize the full $3.3 million facility and establish permanent terms for borrowings through the pendency of the cases. The DIP budget filed with the motion reflects management's expectation that the facility will fund payroll, critical vendor payments, professional fees, and ongoing lease obligations while the company pursues strategic alternatives (Notice of Final DIP Hearing, Dkt. No. 61).

First-Day Relief and Near-Term Priorities

The debtors sought standard first-day relief to minimize operational disruption and preserve value. Key motions include:

• Joint administration; engagement of Donlin, Recano & Company, LLC (DRC) as claims and noticing agent; authority to file a consolidated creditor matrix and Top 30 list with limited redactions. Continuation of cash management practices consistent with U.S. Trustee guidelines as modified by court order.
• Authority to pay prepetition wages and continue employee programs administered via Paycom; the debtors report approximately 1,042 employees across corporate and store operations.
• Extension of time to file schedules and statements to support an orderly transition.

Looking ahead, the debtors indicate they will evaluate additional lease rejections to right-size the footprint and will pursue sale or financing transactions needed to reorganize their financial affairs while maintaining going-concern operations.

Beyond these requests, the first-day record reflects motions typical for restaurant cases—authority to pay or honor certain prepetition obligations to critical vendors and maintain cash management continuity—to reduce operational risk during the opening weeks of the case. The debtors seek limited procedural relief (e.g., consolidated matrices and redactions for personal information) and an extension to complete schedules and statements through mid-November 2025 in accordance with local procedures (First Day Declaration ¶¶ 19-42, Dkt. No. 16).

Outlook

The business retains material strategic assets: a concentrated geographic presence in Texas markets with demonstrated brand recognition, a defined culinary identity that historically produced sector-leading per-person check averages, and an operating platform that generated $76.6 million in sales and $9.6 million in store-level EBITDA during 2024 despite headwinds. However, on October 13, 2025, the debtors filed a Sale and Bidding Procedures Motion, seeking authority to market and sell substantially all assets through a court-supervised process (Sale and Bidding Procedures Motion, Dkt. No. 69; Nation's Restaurant News, Oct. 3, 2025). The filing signals management's assessment that a going-concern sale to a strategic or financial buyer represents the most viable path to preserve value and maintain operations, rather than pursuing a traditional stand-alone plan of reorganization.

The near-term case focus is threefold: maintaining operational continuity across 20 locations while marketing the business, improving unit-level profitability through strategic lease rejections and rent renegotiation to enhance attractiveness to potential acquirers, and conducting a competitive sale process under the court's oversight. Counsel for the debtors emphasized that the Chapter 11 filing was intended "to effectuate the sale or financing transactions that will be necessary to reorganize their financial affairs, preserve thousands of jobs, and ensure that Razzoo's continues providing guests with the highest quality Cajun cuisine and hospitality" (First Day Declaration ¶ 18, Dkt. No. 16).

Razzoo's Chapter 11 filing reflects broader distress in the casual-dining segment. The company joins a growing list of 2025 restaurant bankruptcies, including Bertucci's (its third filing), TGI Fridays (second filing), Pinstripes, Abuelo's Mexican Restaurant, and Hooters, underscoring the intensifying pressure on mid-market chains caught between value-oriented national competitors and rising fixed costs (Restaurant Dive, Oct. 3, 2025). The debtors face familiar challenges confronting this cohort: limited financial flexibility to compete on promotional spend against national operators with deeper marketing budgets, margin pressure from inflation and labor costs, and the structural disadvantage of operating without owned real estate in a contracting revenue environment.

Success will require demonstrating sustainable unit economics at a rationalized footprint, securing stakeholder consensus on lease treatment, and identifying a buyer or capital source willing to underwrite the brand's differentiation thesis in a value-driven competitive landscape. Execution on lease rationalization, restoration of store-level cash flow margins, and a timely path to a sale transaction will be central to recovery outcomes for secured and unsecured creditors. The sale motion, DIP facility timeline, and the Section 341 meeting scheduled for November 10, 2025, will provide clarity on buyer interest and the company's prospects for a successful going-concern transaction over the coming 60-90 days (First Day Declaration ¶ 18, Dkt. No. 16).