$130M Debt Sinks Popeyes Franchisee Forcing the Collapse of 136 Locations

A Miami bankruptcy court filing on January 15, 2026, exposed Sailormen Inc., operator of 136 Popeyes Louisiana Kitchen outlets in Florida and Georgia, with liabilities surpassing $342 million and dwindling cash reserves. The franchisee, which recorded $233.5 million in 2025 revenue but an $18.8 million net operating loss, owes primary lender BMO Bank about $130 million, leaving 2,900 employees in limbo amid one of 2026’s largest quick-service restaurant insolvencies.

Bank Moves to Seize Control

Weeks before the filing, BMO Bank N.A. launched an emergency lawsuit in December 2025, seeking a court-appointed receiver to assume control of Sailormen’s operations. The bank claimed the company faced imminent cash exhaustion and had defaulted on credit terms. Sailormen sought Chapter 11 protection just days ahead of the hearing, invoking an automatic stay that blocked the takeover.

The Deal That Destroyed Everything

The downfall stemmed from a botched 2023 sale of 16 underperforming Georgia restaurants to Tar Heels Spice for roughly $1 million, intended to offload burdensome assets. When the buyer backed out, Sailormen retained millions in annual lease guarantees without corresponding revenue, crippling its finances.

Legal Battles Drain Cash Reserves

In August 2024, Sailormen sued Tar Heels Spice for breach of contract, pursuing damages and lease relief. Landlords initiated evictions, and suppliers pressed for payments, including over $623,000 owed to top distributor Cheney Brothers Inc. by filing time. These legal fights and obligations fueled a relentless cash drain.

Pandemic Debt Time Bomb

Loans originated in 2020-2021, during Popeyes’ peak and low interest rates, became toxic as the Federal Reserve hiked rates above 5% by 2023. Sailormen’s 0.56x debt-to-revenue ratio proved unmanageable amid surging interest, inflation, rising wages, and shifting consumer patterns. Court records listed drivers like elevated food and labor costs, with Restaurant365’s 2025 survey showing 91% of operators hit by food inflation and 89% by labor hikes.

Brand Performance Headwinds

Popeyes faced systemwide sales drops in 2025: same-store sales fell 4.0% in Q1, 0.9% in Q2, and 2.4% in Q3, costing 0.7 market share points in chicken quick-service. Competitors like Chick-fil-A ($22.7 billion sales), Raising Cane’s ($5.0 billion), and Wingstop gained ground, while non-traditional players such as McDonald’s and Chipotle ramped up chicken menus. Restaurant traffic declined in 10 of 11 months per Black Box Intelligence, with drive-thru down 5.8% year-over-year; EY-Parthenon surveys indicated one-quarter of consumers would slash dining first.

Scale of Financial Obligations

Debts total over $342 million, including $112 million principal to BMO and $17 million in interest and fees. Assets range from $100 million to $500 million. The top 10 unsecured creditors, mostly distributors and providers, are due nearly $3 million.

Part of a Growing Bankruptcy Wave

Sailormen aligns with 2025-2026 Chapter 11 cases at Del Taco, Burger King, and others. Attorney Daniel Gielchinsky called the pandemic the spark, with inflation and rates forming a perfect storm, forecasting hundreds of chain closures by year-end. Popeyes responded with leadership changes: Peter Perdue as U.S. and Canada president in November 2025, Matt Rubin as chief marketing officer in January 2026, and the “Easy to Love” strategy gaining 85% franchisee support for ads and remodels by 2030.

An emergency hearing on January 21 will decide cash collateral access for payroll and operations, with Sailormen as debtor-in-possession. Profitable sites—deemed the majority by Popeyes—may draw buyers, enabling lease rejections and debt restructurings. Outcomes could range from reorganization to acquisition or liquidation, hastening industry consolidation among stronger players. For employees and communities, the stakes involve job stability and local economic roles, underscoring risks from overleverage even at scale.