Over the past few years, many U.S. restaurants have been forced to close their doors or file for bankruptcy. While it was never easy to break into the restaurant business, these days, it seems even more challenging.
Many hospitality establishments that weathered the Covid pandemic didn’t make it through unscathed. This means already-struggling businesses are now dealing with a new set of challenges:
- Inflation;
- High labor costs;
- Rising food expenses;
- Aggressive competition;
- Shifts in consumer behaviors (turning to home-prepared meals instead of eating out).
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As a result, many famous restaurant chains, and diners have filed for bankruptcy this year. These include Red Lobster, which closed 120 restaurants, TGI Fridays, Fernando’s Mexican Cuisine, Bertucci’s, Bar Louie, and others.
In Texas, the food-service industry is among the biggest private-sector employers, counting more than 57,000 restaurants, generating $137.8 billion in annual sales, and employing more than 1.4 million, according to Texas Restaurant Association.
This makes the Lone Star State among the top three states with the largest food-service industries. Despite its scope, the industry in Texas is not immune to the above challenges.
Texas restaurant District 7 Grill files for Chapter 11 bankruptcy.
Image source: Shutterstock
District 7 Grill files for Chapter 11 bankruptcy
A small, Houston-based restaurant chain, District 7 Grill, has filed for Chapter 11 Subchapter V bankruptcy protection in the Southern District of Texas.
District 7 Grill has offered a grill-style dining experience for more than two decades. It has four restaurants across Houston:
- District 7 Grill – Eado, located at 1508 Hutchins Street;
- District 7 Grill – Midtown, located at 501 Pierce St;
- District 7 Grill – Tunnel, located at 1001 Louisiana St;
- District 7 Grill – Memorial, located at 15377 Memorial Dr. Suite 122.
District 7 Grill was known for its fresh take on American-style cuisine, from classic Eggs Benedict and savory Short Rib Burgers to artisan Pizzeria Pizza, fresh Mahi Mahi Salad, and Center Cut Filet Mignon.
The restaurant has an average 3.9 out of 5 rating on Yelp, based on 707 reviews. The latest rating is from July 6 of this year, and it praises the establishment.
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“We came here for breakfast and enjoyed our meals. I had the migas and my husband had pancakes and both were good. Sat on the covered patio and there were fans and a nice breeze (it was overcast and not hot this day). Waitstaff (Luke and Sena) was super attentive and so nice! I would recommend!”
Despite the good rating and many recommendations, District 7 Grill filed for bankruptcy, reporting assets and liabilities each in the range of $500,000 to $1 million, with 1-49 creditors.
Texas restaurant operators cite high labor costs as one of the biggest problems
An April 2025 CNN article, “America has lost its appetite for casual dining chains,” reported the most recent closures at the time, including Hooters, along with recent trends and sales statistics.
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Since 2019, restaurant prices have increased 34%, outpacing the overall growth of inflation during that time, writes the outlet, citing data from the Bureau of Labor Statistics.
“They’re trying to aim at the average middle consumer,” said Associate Professor of Food Marketing Ernest Baskin at Saint Joseph’s University. “When consumers start watching their budget, the middle shrinks.”
For 45% of Texas restaurant operators, high labor costs pose the biggest challenge, according to Touch Bistro. As many as 29% have turned to service charges in an effort to increase revenue, and 44% use TikTok to promote their offerings.
Based on the report, some Texas restaurants are experimenting with these “junk fees” to offset shrinking profits. The actual impact of these charges remains to be seen.
Another issue restaurants in Texas are facing is the cost of third-party delivery apps, as online ordering becomes more popular statewide.
What’s next for District 7 Grill?
Unlike Chapter 7 bankruptcy, which results in liquidation and final closure, Chapter 11 gives struggling businesses such as District 7 Grill more options. It offers them a second chance to get back on their feet, particularly if they have a decades-long brand value and loyal customer base.