The owner of Giraffe and Ed’s Easy Diner is to close 27 restaurants putting hundreds of jobs at risk.
The brands will enter a company voluntary arrangement (CVA) and close almost a third of their 87 restaurants.
Boparan Restaurant Group (BRG) said sales had improved at the chains since they were acquired in 2016, but several sites remained unprofitable.
Tom Crowley, chief executive of BRG, said: “The CVA is the only option to protect the company.”
He added: “The combination of increasing costs and over-supply of restaurants in the sector and a softening of consumer demand have all contributed to the challenges both these brands face.”
The proposal to enter a CVA will be put to a creditor vote, with advisers from KPMG overseeing the insolvency process.
BRG snapped up Giraffe from Tesco in 2016, before combining it with Ed’s Easy Diner, which it had bought in a pre-pack administration the same year.
The two brands form a combined entity, which in the most recently available accounts had annual turnover of £67.1m with underlying losses of £1.6m.
The company owns 70 branches of the two chains, with 17 franchised restaurants unaffected by the CVA.
Will Wright, restructuring partner at KPMG, said: “This CVA seeks to address the cost of the company’s leasehold obligations across a number of unprofitable sites, and if successful, will put the business on a surer financial footing.”
Creditors will vote on the proposal on 21 March with at least 75% needed to approve it for the CVA to proceed.
BRG also owns other brands, which are not involved in this CVA. These include fish and chip restaurant Harry Ramsden and the upmarket Cinnamon Collection.
It is also the master franchisee for US brand Slim Chickens, which first opened in the UK last year.
BRG is owned by “chicken king” Ranjit Boparan, who also owns the 2 Sister group, which supplies food to supermarkets such as Aldi, Asda, Co-op, KFC, Lidl, Marks & Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose.
Last year, rising costs and tougher competition led to several restaurant brands shutting branches, including Prezzo, Jamie’s Italian, Byron, Carluccio’s, Gaucho and Gourmet Burger Kitchen.