Most restaurants operate on such narrow profit margins that a bad month can wipe out a profitable year.
“Many full dining rooms still end the month with thin or negative margins,” according to Restaurant Mode.
Across the industry, average restaurant net profit margins range between 3 and 10%.
A 2024 National Restaurant Association survey showed that many restaurants fall on the lower end of that scale.
“Among full-service respondents to the survey, income before taxes represented a median of 2.8% of sales in 2025. For limited-service respondents, income before taxes was a median of 4.0% of sales,” according to NRA’s 2025 Restaurant Operations Data Abstract.
Rising costs have also created a situation where restaurants need to raise prices, but that can also send customers elsewhere.
“With across-the-board rising input costs, if the average restaurant operator hadn’t raised their prices in the last 5 years, their margin would have gone from 5% of sales pre-2020, to a pre-tax loss of nearly 24% today,” according to NRA research on inflation.
It’s a challenging operating environment that has led to many restaurant operators closing their doors, and Pihakis Restaurant Group, which has closed over a dozen restaurants, has been struggling to avoid shutting down completely.
Pihakis Restaurant Group faces $13.8 million in debt
Birmingham-based Pihakis Restaurant Group (PRG), which includes restaurants in Atlanta, faces $13.7 million in lawsuits and liens, according to a report by AL.com.
The chain, which operates a variety of concepts, including Little Donkey Mexican Restaurant, Rodney Scott’s BBQ, Hero, Magnolia Point, and Psito, has already closed a number of locations.
“Since mid-April, the group has both temporarily and permanently closed 12 restaurants across the Southeast, including Psito in Summerhill and Hero Diner in Fayetteville. Google and the group’s restaurant websites currently list the Atlanta locations of Psito and Hero Diner as ‘temporarily closed,'” reported Rough Draft Atlanta.
A number of the chain’s Hero doughnut shops, sometimes called Hero Diner, have closed before the current troubles.
“At its peak, there were at least ten Hero locations across four states. The company closed short-lived locations in Charleston and Nashville in 2024 and after opening in Montgomery in May 2025, closed it, too, earlier this month,” Tomorrow’s News Today Atlanta reported.
In addition, all restaurants at the company’s multi-eatery Valley Post project have closed, after a lawsuit was filed against a variety of Pihakis Restaurant Group brands and founder Nick Pihakis.
“As of April 23, 2026, there is currently unpaid, past-due, and owing to Plaintiff
from the LLC Defendants a total of $394,238.73, plus interest and costs of collection, including attorneys’ fees, pursuant to the terms of the contracts and the invoices,” the lawsuit states.
Pihakis Restaurant Group faces multiple lawsuits
“As of Wednesday, April 29, the liens are totaling more than $12 million, according to public records filed in Jefferson and Shelby counties,” according to WBRC.
Pihakis Restaurant Group told the local news site that it’s working with a consultant to create “more sustainable operations across our brands.”
“Following our announcement of the permanent closure of Tasty Town Greek Restaurant and Lounge in Birmingham and Hero in Hoover, we want to provide an update as we continue to work through organizing our brands and locations to ensure sustainability,” a company statement shared with WBRC on April 17 explaining the process said.
“We have engaged consulting support and are focused on doing the hard, careful work required to build a path forward — one that honors our employees, our guests, and the excellent family of restaurants that make up Pihakis Restaurant Group.”
Shutterstock
Pihakis Restaurant Group landlord files liens
Commercial real estate developer Michael Mouron owns and leases several properties to Pihakis Restaurant Group and its affiliated entities and filed liens on April 14 against eight of those locations.
- A $72,065.56 lien originally filed against 1726, 1722, and 1720 28th Avenue South, where Hero Homewood and Luca Lagotto are located, has been amended to $2,708,365.56.
- The lien filed against Rodney Scott’s Homewood for $36,090.50 has been amended to $803,856.51, and the lien against Little Donkey Homewood has been amended to $803,856.51. It was originally filed for $31,042.98.
- A lien filed against Pihakis Restaurant Group for four properties on 3rd Avenue South in Birmingham, where Joyland is located, was amended on April 27 to $1,075,983.64.
- Mouron also owns the Dunnavant Valley development in Chelsea, where Pihakis Restaurant Group recently opened Hero Diner, Little Donkey, Luca & Lucy, and Rodney Scott’s BBQ. In an amended lien for these properties filed on April 27, Mouron is seeking to “secure an indebtedness of $7,166,296.20, plus reasonable attorney’s fees and other expenses for rent due under the said leases.”
Source: WBRC
“A lien is a security interest or legal right acquired in one’s property by a creditor, or lienholder. A lien usually prevents the sale of the property until the underlying obligation to the creditor is satisfied. If the underlying obligation is not satisfied, the creditor may be able to take possession of the property involved,” according to Cornell Law.
A request for comment to the email listed on the Pihakis Restaurant Group website bounced back as “undeliverable.”
Related: McDonald’s rival closes 729 more restaurants