US Foods and other vendors sue Boston Market
The fast-casual chain is facing several lawsuits from vendors and landlords, including former owner McDonald’s, over past-due bills. Employees say the company mostly stopped paying wages in June.
Boston Market is facing lawsuits from employees over unpaid wages and vendors over past-due bills and ignored settlement agreements.
US Foods, the giant Illinois-based distributor, filed a lawsuit against the fast-casual chain this week, arguing that it has reneged on nearly $11 million worth of unpaid bills dating back two years.
That is not the only distributor taking issue with the chain: Fort Worth, Tex.-based Ben E. Keith is suing Boston Market over $1 million worth of unpaid bills.
Several landlords have also sued the chain, including the company’s former owner, McDonald’s, which sued the chain for the second time this week over issues related to a pair of locations on the Massachusetts Turnpike.
Another lawsuit, filed by employees of 11 Boston Market locations in Massachusetts, accuses the company of either delaying paychecks or not paying them at all.
All these lawsuits have come this year and suggest that Boston Market is facing growing financial difficulty after it struggled coming out of the pandemic as wage rates and food costs took off.
Boston Market has struggled off and on for years but its challenges appeared to grow worse just before the pandemic when, in 2019, it closed 45 locations. The company was unloaded the next year to Engage Brands, a Pennsylvania-based operator of Pizza Hut and Checkers and Rally’s restaurants.
Jay Pandya told Restaurant Business the next year that the company was on pace to open “two restaurants per week.”
While that might be the case, the brand has appeared to close even more locations. The chain closed 41 locations and, with 300 restaurants, it has 93 fewer locations than it did in 2018. System sales since 2019 have fallen 26%, including a 10% decline last year when sales were lower than they were in 2020—a year marked by closures of dine-in service around the country and Boston Market’s own sale.
Engage Brands also acquired Corner Bakery in 2020, which declared bankruptcy earlier this year and is being sold to an Applebee’s franchisee, SSCP Management.
Boston Market appeared to fall behind on its bill payments early this year, based on accusations in various lawsuits. US Foods in its lawsuit said that it gave Boston Market a promissory note worth $11.6 million in January, after the chain failed to pay its distribution bills that month. US Foods continued to provide distribution this year under a separate contract.
But, beginning in February, Boston Market stopped making regular payments under the promissory note agreement and also didn’t pay for $300,000 worth of distribution services this year, according to that lawsuit. US Foods argues that Boston Market owes $10.5 million on the promissory note plus another $807,400.17 in interest, in addition to $300,000 on bills not paid this year.
A few landlords also sued the company, including McDonald’s, which owned the chain in the early 2000s. McDonald’s initially sued Boston Market last year, arguing that Boston Market didn’t pay rent on a pair of locations on the Turnpike. One of the locations was closed, even though the lease agreement requires Boston Market to keep a restaurant operating there, according to the lawsuit.
Boston Market agreed to pay rent and reopen that location. “Frustratingly, seven months after it was executed, Boston Market breached the settlement agreement and again failed to comply with the lease,” McDonald’s said in its second lawsuit, filed in a Massachusetts state court in January.
Employees, meanwhile, have also sued the chain. There are a few lawsuits and complaints against Boston Market over delayed and unpaid wages.
The most recent such lawsuit, filed this week in another Massachusetts state court, alleges that Boston Market either delayed their pay or didn’t pay wages altogether for each of the past four pay periods dating to May 29. That lawsuit seeks class action status, covering 11 corporate Boston Market locations in Massachusetts.
Boston Market hasn’t responded to a request for comment on Tuesday.