"Brothers Forrest and Leroy Raffel launched Arby's in 1964, inspired by the rise and operational efficiency of McDonald's and Burger King. Instead of joining the burger wars, however, they bet on something different: the classic roast beef sandwich. The gamble worked at first, and the chain expanded rapidly, riding the wave of America's fast-food boom. But by 1970, it seemed like they had bitten off more than they could chew."
"Their plan to go public fell through due to shifting SEC regulations, and without the expected cash infusion, Arby's finances unraveled quickly. Loan payments became unmanageable, and banks tightened the flow of money, refusing to release funds to support franchise operations. In turn, franchisees stopped sending their share of sales back to headquarters. It was a vicious cycle: with no cash coming in, the company couldn't meet its obligations, and by the end of 1970, Arby's had little choice but to file for bankruptcy."
"For many chains, filing for bankruptcy is the end of the story. Not Arby's. The Raffel brothers put their heads down and got to work. Like seasoned entrepreneurs, they focused first on profitability, and only then on growth. By 1975, just a few years after hitting rock bottom, Arby's had bounced back with over 5"
Brothers Forrest and Leroy Raffel launched Arby's in 1964, inspired by the rise and operational efficiency of McDonald's and Burger King. They bet on roast beef sandwiches rather than competing on burgers, and the chain expanded rapidly during America's fast-food boom. Heavy reliance on bank loans and private equity, a failed plan to go public due to shifting SEC regulations, and tightened bank credit caused franchisees to withhold payments, producing a cash crunch. Arby's filed for bankruptcy by the end of 1970. The Raffel brothers refocused on profitability before growth, and by 1975 the chain had recovered and resumed expansion.
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