Inflation Continues to Plague Many Brands – Even Iconic Ones
Many restaurant chains shut down locations during 2024. The whys are varied, but inflation almost certainly led the way, with wages, ingredient costs and other expenses increasing while cost-conscious consumers dined out or spent less.
Even though inflation has declined, restaurants remain challenged. (The Consumer Price Index for All Urban Consumers increased only 0.3%, seasonally adjusted, last month, and it rose 2.7 percent over the past 12 months, not seasonally adjusted, according to the Bureau of Labor Statistics.) Even as the economy rebounds, dozens of brands – including KFC, Red Lobster, Subway, TGI Friday’s, Wendy’s and Denny’s – have closed restaurants.
A Forbes article said Denny\’s specifically cited inflation-related challenges as a driving force behind 57 closures last year and another 10 to 20 since January 2024. Restaurants also blamed changing customer desires such as wanting the speed and convenience of digital ordering, pivoting to suit dietary/nutrition needs, and prioritizing value, of course. Financially troubled brands also closed underperforming locations to trim their expenses as they restructured, Forbes said.
Drawing on reports from Forbes, The Takeout, EatThis.com, FinanceBuzz.com, MoneyTalksNews.com and Parade, here’s a look at restaurant chain closures by several well-known franchise brands.
Restaurant Chain Closures in 2024
Applebee’s Closures
Parent company Dine Brands Global disclosed this fall that the restaurant would close 25 to 35 locations this year; it closed at least 33 last year. “These closures aren’t a sign of struggling franchisees,” President Tony Moralejo said. “They’re offering a sign of struggling trade areas.” To partly counteract the slippage, Applebee’s will co-brand with IHOP, probably starting in the first quarter of 2025, according to Nation\’s Restaurant News.
P.S.: Flynn Group, a large, multi-unit restaurant franchisee, plans to expand Applebee’s with 25 new restaurants over the next seven years. Flynn Group recently acquired 26 Applebee\’s restaurants in Florida and Georgia.
Boston Market Closures
Boston Market began 2023 with 300 locations, but Restaurant Business reported in March that it had only 27 left. The brand has experienced legal and financial troubles, with many closures due to landlord evictions for unpaid bills as well as state officials mandating shutdowns over unpaid sales taxes.
Buca di Beppo Closures
Known for family-style Italian dining, Buca di Beppo revealed in July it would permanently close 13 locations in California, Michigan, New York and Utah. “These restaurants were unable to recover from the damage caused by the pandemic and other market pressures,” according to a company news release. Buca di Beppo still has 44 locations. It filed for Chapter 11 bankruptcy protection days after the closures but has continued operations.
BurgerFi Closures
CEO Carl Bachmann shuttered 14 underperforming BurgerFi sites in 2023, and around a couple of dozen more while filing for Chapter 11 bankruptcy this year. The gourmet burger chain reported a 13% decrease in same-store sales and a 6% drop in revenue during the first quarter of the year, blaming bad weather in key markets and a “challenging consumer environment.” BurgerFi retains 100 or so restaurants and is “right-sizing” its footprint, Bachmann says.
Denny\’s Closures
In October of this year, Denny’s confirmed it would axe 150 more locations that are underperforming. About half will occur in 2025. Denny’s has also said it will be opening a few new locations.
Hardee\’s Closures
Last year, Hardee\’s closed 39 stores in eight states. More closures have occurred this year in Illinois (including a 40-year-old restaurant), Tennessee and Missouri.
Hooters Closures
The 41-year-old sports bar chain shut dozens of underperforming locations – media outlets estimate the number at 40, but the company gave no numbers – in Florida, Kentucky, Rhode Island, Texas and Virginia this summer. Hooters has had a nearly 15% decline in system-wide sales since 2018, and is burdened by $300 million in debt. But it is still opening new restaurants outside the U.S.
KFC Closures
KFC has experienced problems for several years, and in the third quarter of this year alone, sales plummeted 5%. One franchisee boarded up 25 stores in Illinois, Indiana and Wisconsin in August. Other closures have included three in Illinois in February and two in California in January.
MOD Pizza Closures
This year MOD Pizza closed 27 locations, including five in California. A MOD Pizza spokesman said the shutdowns were unrelated to California’s new, higher minimum wages. MOD Pizza\’s website said it had 512 restaurants in July, 527 in April, and 553 at the beginning of the year.
Noodles & Company Closures
In August, Noodles & Company executives said 20 underperforming restaurants racked up $2 million in combined operating losses. CEO Drew Madsen said 10 to 15 of those are likely to close. The goal is to improve the overall health of the fast-casual chain, which serves noodle dishes, soups, salads and sandwiches.
PDQ Closures
In February, this regional chain closed six restaurants in North Carolina and two in South Carolina. According to PDQ\’s website, PDQ currently operates 59 locations in Florida, North Carolina, New York and New Jersey. The brand is known for its fried chicken tenders, sandwiches, salads, French fries and milk shakes.
Pizza Hut Closures
Pizza Hut confirmed this summer that it shuttered some sites in Ohio and Indiana because of franchisee EYM Group\’s financial struggles. The group had been sued for unpaid bills.
Red Lobster Closures
With outstanding debt of more than $1 billion and cash reserves of $30 million, Red Lobster filed for bankruptcy last May, and the brand was sold in September to Fortress Investment Group. Before the bankruptcy, Red Lobster shut nearly 100 restaurants, leaving 570 open at that point; it shuttered another 23 sites in August.
Rubio\’s Coastal Grill Closures
Fast-casual Mexican restaurant Rubio\’s Coastal Grill unexpectedly closed 48 of its California locations in May. The company attributed the action to “the rising cost of doing business in California,” which has raised fast-food employees’ minimum wage to $20 an hour. Rubio’s was already struggling, though, filing for Chapter 11 bankruptcy in 2020. It still has around 85 restaurants in California, Arizona, and Nevada.
Subway Closures
Subway has shut down restaurants aplenty over the past two years, including 400 in 2023 alone. In January 2024, franchisee Delight Foods Inc. abruptly closed 18 Northern California restaurants. Washington and Oregon lost 23 stores when Subway terminated a franchisee. The brand has aggressive expansion plans, but most new restaurants will be international.
TGI Fridays Closures
In January 2024, TGI Fridays announced it would shut down 36 underperforming U.S. restaurants. Around four dozen more TGI Fridays closed in October, leaving the chain with some 162 U.S. restaurants. Ray Risley, U.S. president and chief operating officer, said that “by strengthening our franchise model and closing underperforming stores, we are creating an unprecedented opportunity for Fridays to drive forward its vision for the future.” It has filed for Chapter 11 bankruptcy protection.
Tijuana Flats Closures
In January the regional brand Tijuana Flats closed 39 locations and then last spring, it sought Chapter 11 bankruptcy protection – and immediately closed 10 restaurants in Florida and one in Virginia. The decision came after “a unit-by-unit analysis of financial performance, occupancy costs and market conditions,” the company said. Today the chain has 65 company-owned restaurants in Florida and 26 franchisee-run locations in Florida, Alabama, North Carolina and Tennessee.
Wendy’s Closures
Last month, the burger franchise announced it would close 140 locations. “We want to further improve our restaurant footprint and overall system health,” CEO Kirk Tanner explained. The soon-to-be-gone sites have “operating margins well below the system average,” he said.
On a brighter note, 55-year-old Wendy’s has been opening restaurants, too. “We anticipate that total closures in 2024, including additional closures in the fourth quarter, will be offset by new restaurant openings this year, leaving our net unit growth approximately flat compared to the prior year,” Tanner said. “We opened 64 Wendy’s restaurants globally during the third quarter and remain on track to meet our goal of 250 to 300 openings for the full year.”
Other Brands with Closures
Other well-known brands that minimally franchise or don’t franchise also shuttered locations this year. Those included Cracker Barrel (closing two California locations and one each in Oregon and South Carolina), Shake Shack (nine total closures in California, Ohio and Texas) and Outback Steakhouse, which reported 41 closures among its various brands. Outback’s U.S. franchise locations are in western states. Shake Shack also has announced it will open around 80 new locations across the country that were either owned by Shake Shack or licensed to other owners.
