True Food Kitchen served its last meals at 12 of its 46 restaurants on Sunday, October 4, and filed for Chapter 11 protection the same day, leaving 34 restaurants in 14 states open. The Phoenix-based health-focused chain reported about $42 million in total debt and lined up $20 million in emergency financing from an investor, HumanCo, to keep paying staff and suppliers while it looks for a buyer or a recapitalization. The filing follows the chain’s first annual sales decline and a run of leadership changes. What the company has not said is how its gift cards are treated.
Twelve dining rooms dark on filing day
Anyone holding a True Food Kitchen gift card faces a plain question: is the card still good, and where can it be spent? The company’s announcement says its remaining restaurants are open and that its first-day requests to the bankruptcy court cover maintaining guest programs, but it does not name gift cards. A card meant for one of the 12 closed restaurants has no dining room left to use it in, and no change has been announced for the 34 that stay open.
The 34 restaurants still open are the number to watch, since the company says it is optimizing its footprint through a court-supervised sale process.
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In its October 5 announcement, the company said the 12 restaurants had their final day of service on October 4. NJBIZ reported that the bankruptcy petition went to the U.S. Bankruptcy Court for the Southern District of Texas that same day, and that the closures include the Shops at Riverside in Hackensack and Menlo Park Mall in Edison, New Jersey. A state layoff notice lists 89 workers at those two sites, with separations effective January 3, 2027.
CEO Jeff Chandler called the process “the best path forward to simplify the business and focus on what we do best.” The 12 closures amount to about 26% of the chain’s 46 restaurants. Hoodline’s report names Bethesda, Maryland; Reston, Virginia; Garden City, New York; and Chicago among the closed locations, and says the 34 survivors span 14 states.
A $42 million debt load and a court-run sale
True Food Kitchen Parent, LLC and eight affiliated entities filed together. Hoodline puts total debt at about $42 million, a figure that includes merchant cash advance liabilities, a form of financing in which a lender buys a share of future card sales at a discount. Those advances are repaid out of daily revenue, which can leave a restaurant with less cash for payroll when sales soften.
The $20 million of debtor-in-possession financing comes from HumanCo TFK IV and is subject to court approval. Debtor-in-possession financing is new money lent to a company already in bankruptcy, usually repaid ahead of older debts. The company says that money plus cash from operations should cover the case and the sale process, including wages, benefits and vendor payments.
The end point is a sale or a rebuilt balance sheet. The company says it will run a court-supervised sale process to find what it calls a long-term partner, and any deal needs court approval. It has hired Teneo, with Nathan Cook serving as chief restructuring officer, with SOLIC Capital as investment banker and Gordon Brothers as real estate advisor as the company works to optimize its restaurant footprint.
Sales that stalled at $312 million
The financial slide was gradual. Hoodline, citing Technomic, reports that systemwide sales peaked at $314 million in 2024 and slipped 0.7% to $312 million in 2025, the chain’s first annual decline. The chain built its following on a wellness-focused menu from Dr. Andrew Weil and restaurateur Sam Fox, with locations in malls and lifestyle centers, and a sales line that stopped growing left little room for $42 million of debt.
Management turnover is the other thread. Hoodline reports that the company cited leadership changes as a central driver of shifting expansion plans, brand direction and menu offerings. CEO John Williams resigned in December 2024, Jim Dunn then led on an interim basis, and Chandler took over before the filing. Oprah Winfrey, who invested in 2018 and joined the board, remains a minority investor but left the board this month, Hoodline reports.
Gift cards when a restaurant chain files
Bankruptcy law does give some weight to customers who paid ahead. Section 507(a)(7) of the Bankruptcy Code ranks individuals’ unsecured claims for money deposited before a filing for goods or services never delivered in seventh place, capped per person. The cap was raised from $3,350 to $3,800 effective April 1, 2025. The text refers to deposits, and it does not mention gift cards by name.
The company’s announcement points to court filings at cases.stretto.com/FRCBalance and a court information line at (855) 794-4256 in the U.S. and Canada, where cardholders and other creditors can follow the case. For the 12 dark locations, nothing in the announcement says where a card can still be used.
The decisive document will be the court’s ruling on the first-day requests to continue guest programs, because it will show whether gift cards fall inside them. Until that order is public, the 34 open restaurants are running on a $20 million loan that still needs a judge’s approval, and the chain’s own timeline ends in a sale that could put any outstanding card in a new owner’s hands.
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This article was prepared with AI assistance and reviewed against the cited public sources.
