Eating healthy is important, but when we want to treat ourselves or we crave some delicious comfort food, Italian cuisine often comes to mind.
Yes, hummus is fantastic, but for a real treat, I want pasta, pizza, and some mouthwatering gelato.
Unfortunately, not even Italian restaurants have been immune to the economic challenges in the country over the last few years. Rising costs are the key challenge for the overall industry.
More than nine in 10 operators cite food, labor, insurance, energy, and swipe fees as significant challenges, according to the National Restaurant Association.
Moreover, 42% of operators reported their restaurant was not profitable in 2025.
Over the last couple of years, several Italian or Italian-American chains have filed for Chapter 11 bankruptcy:
- Bravo Brio Restaurants
- Bertucci’s
- Buca Di Peppo
- EYM Pizza (Pizza Hut)
- People First Pizza Inc.
- Red Door Pizza
Photo by jetcityimage on Getty Images
Why are Italian restaurants struggling?
Recent healthy eating trends have led people to avoid yummy, yet high-carb foods. But this can’t be the only factor behind Italian restaurants’ struggles.
Several industry reports reveal three key reasons why Italian restaurants are at risk in 2026.
- Consumer trade-down: High-income diners might still be eating at upscale Italian restaurants; however, middle-income families have been forced to trade down to fast-casual and eating at home. In January 2026, the food-away-from-home (restaurant and other foodservice purchases) CPI is 4% higher than in January 2025, while the food-at-home (grocery store or supermarket purchases) CPI is 2.1% higher than in January 2025, according to data from the United States Department of Agriculture.
- High volatility in ingredient prices : Italian cuisine relies heavily on wheat (pasta), cheese, and specialized oils, categories that have seen some of the most fluctuating raw ingredient prices, “ultimately affecting profitability and manufacturing costs,” according to Fortune Business Insights.
- Shift in consumer preferences: For example, in late 2024, Texas Roadhouse officially dethroned Olive Garden as the top casual-dining chain by sales, signaling a shift in consumer preference from pasta-heavy menus to steakhouses, according to TheStreet’s Kirk O’Neil, who specializes in bankruptcy and restructuring news.
One popular Italian restaurant chain, whose owner recently filed for Chapter 11 bankruptcy, continues to struggle. And now it’s closing more locations.
Fazoli’s closes two more Michigan restaurant locations
Fast-casual Italian restaurant chain Fazoli’s is closing two Michigan locations, leaving just a few operating in the state, reported WOOD-TV in Grand Rapids.
On Feb. 25, there were closure signs posted outside the Muskegon location at 1780 E. Sherman Blvd. near US-31 and at 2521 Alpine Ave. NW near 3 Mile Road.
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The signs read: “This location is now closed. Thank you for supporting this Fazoli’s location. We have enjoyed the opportunity to serve you.”
The notices further direct customers to the remaining Fazoli’s locations in Battle Creek, Lansing, and Jackson. Fazoli’s still owns and runs one location in Monroe and one near the Michigan-Indiana border in Mishawaka, reported Click on Detroit.
Over the last few months, Fazoli’s has been slowly shutting down locations across West Michigan. In December, it closed one restaurant at 570 Baldwin St. in Jenison and another in September at 4615 West Main St. in Kalamazoo, reported MLive.
Why are Fazoli’s locations closing down?
The closures come amid the ongoing financial struggles of its parent company, California-based FAT Brands Inc.
In January 2026, FAT Brands filed for voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of Texas, as reported in the company’s official press release.
“Our dynamic portfolio of brands has demonstrated tremendous resilience in a challenging restaurant operating environment over the last few years. We are well positioned for long-term profitability and growth. The Chapter 11 process will provide us with the opportunity to strengthen our capital structure to support our concepts and ensure they remain at the forefront of their sectors,” stated FAT Brands CEO Andy Wiederhorn.
FAT Brands plans to use the filings to deleverage the balance sheet, maximize value for its stakeholders, and support continued growth of its brands, reported TheStreet’s Daniel Kline.
“FAT Brands’ portfolio of 18 restaurant concepts encompasses more than 2,200 locations worldwide. Iconic brands such as Fatburger, Johnny Rockets, and Round Table Pizza, among others, are expected to operate as usual during the Chapter 11 process and will continue to provide their signature dining experiences,” Kline wrote.
In its bankruptcy filing, the company reported assets and liabilities both in the range of $1 billion to $10 billion, a common broad bracket in Chapter 11 disclosures.
FAT Brands has been overwhelmed by debt tied to securitized borrowings; its total debt was estimated around $1.5 billion to $1.58 billion due to leveraged acquisitions and financing strategies.
The restaurant operator had already closed the 32 locations before filing for bankruptcy protection, reported TheStreet’s Kirk O’Neil.
FAT Brands closings:
- Smokey Bones: Boca Raton, Fla.; Orlando, Fla.; Pittsburgh, Pa.; Avon, Ind.; Chattanooga, Tenn.; Louisville, Ky.; Cheektowaga, N.Y.; Charleston, S.C.; Florence, Ky.; Rockford, Ill.; Plantation, Fla.; Newport News, Va.; Buford, Ga.; Columbus, Ohio; Grand Rapids, Mich.; Fort Lauderdale, Fla.; Utica, Mich.; North Wales, Pa.; Stoughton, Mass.; Casselberry, Fla.; Maumee, Ohio; Woodbridge, Va.; Wilkes-Barre, Pa.
- Yalla Mediterranean: Burbank, Calif.; Walnut Creek, Calif.; Culver City, Calif.; Pleasant Hill, Calif.; Seal Beach, Calif.; Dublin, Calif.; Fremont, Calif.
- Johnny Rockets: Orange, Calif.; Santa Monica, Calif.
Source: TheStreet
Fazoli’s: from one location to 208, famous breadsticks and more
Fazoli’s was founded in 1988 in Lexington, Kentucky, with the goal of making fresh, high-quality Italian food with the speed and convenience of a fast-food restaurant.
Its core philosophy is “Fast. Fresh. Italian.” The eatery is especially famous for its signature, unlimited garlic breadsticks.
“At Fazoli’s, we promise more than just a meal; we offer an experience where every guest is an integral part of our family. Here, breaking breadsticks is not just a tradition; it’s an invitation to savor every delicious moment. Join us at Fazoli’s, where every visit is a memorable chapter in our shared story of Italian delight,” reads Fazoli’s Our Story page.
From the single restaurant in Kentucky, Fazoli’s has grown into a national brand with more than 208 locations across 28 states, making it one of the largest quick-service Italian restaurants in the US.
Aside from breadsticks, Fazoli’s menu offerings include freshly prepared pasta entrees, sub sandwiches, salads, pizza, and desserts.
Related: Subway drops its free sub offer, angering loyal customers
