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A top Subway franchisee has filed for Chapter 11 bankruptcy protection in an effort to reorganize and stay in business, the Street reports.
CGA Corporation, a Subway operator based in Montebello, California, listed up to $100,000 in assets and up to $500,00 in liabilities in its filing on June 25. The decision came after the popular fast food sandwich chain had already shuttered more than 600 locations during the past year amid struggling sales in a competitive market.
The CGA bankruptcy is the latest example of the current fragile fast food landscape with local operators having to take on the rising costs and shrinking margins, including Subway, which had previously ranked as one of the most popular fast-food chains in the United States. Subway, which had previously led all fast food restaurants in terms of locations, has since fallen behind Jersey Mike's and Jimmy John's in the sandwich chain market.
Additionally, the rising cost of ingredients amid inflation has played a factor in Subway's decline as other fast food giants have worked to slash prices. Subway has also dealt with brand trust issues having previously dealt with questions regarding the authenticity of its tuna and claims that its bread didn't legally qualify as bread, which is has denied, though the reports haven't helped with the perception.