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Epic Economist, 9/10/23
"15 Fast Food Chains That Are
Seriously Struggling Right Now"
"Even when we're in good times, managing a restaurant is tough. Profit margins are so slim that any small change in the price of supplies, wages, or operational costs can put even the finest of establishments in the red. In recent years, several chains have been coping with rising food prices, declining foot traffic, and higher taxes, and the downturn now unfolding in the industry has shown that even the most established brands can go from heaven to hell with shocking speed. In this highly competitive environment, many companies that are barely afloat may sink before we even notice.
For instance, fast-casual seafood options are not easy to find and unfortunately, may become even harder to come by as Red Lobster faces growing challenges to recover its financial stability. Problems caused by lower supplies and steady demand as well as rising labor and operational costs are disrupting the all-you-can-eat popcorn shrimp empire in the worst possible way. Last year, it predicted a loss of $10.4 million, but it ended up losing $15.3 million in a single quarter. Thai Union Group, who bought the chain in 2020, is trying to improve the restaurant's menu to keep up with consumer trends, but about 100 locations are at risk of being shuttered because they are "no longer viable for Red Lobster," according to the company's executives.
Likewise, there are many reasons why Buffalo Wild Wings is struggling. Although the chain seems to have all the elements of a successful restaurant, such as fun foods, sports, and cozy spots to hang out with friends, profitability has been an issue for years. That led shareholders to pressure the company into selling underperforming locations to franchisees. But when a chicken wing shortage and higher prices hit the market, some of the chain's problems were out of its control. Increased menu prices drove sales even lower at a time when rivals like McDonald's and KFC kept selling wings at cheaper prices. Recent consumer complaints about the declining quality of its products have only added to the company's woes. The restaurant is in the middle of a downturn, and if it fails to address its issues soon, BWW will likely fall in distress in the next few months.
Even though doughnuts can be bought in thousands of chains, bakeries, convenience, and grocery stores across the country, Krispy Kreme has established itself as the go-to doughnut shop for millions of Americans. A round of store shutdowns in 2022 eliminated dozens of underperforming locations and allowed the company to save on costs at a time when financial results were disappointing. Even though that helped in the short-term, CEO Michael J. Tattersfield recently announced that layoffs are coming as the chain plans to save on labor costs by increasing automation in its stores to reduce its debt, which suggests that Krispy Kreme's financial problems aren't going away.
If your favorite chain made to this list, now it's time to visit that restaurant before doors close for good. Conditions can abruptly change in the restaurant industry, and a single failure in strategy can lead to the demise of a brand that took decades to be built. With a recession at our door, the fight for survival will intensify, and only the most apt will stay in business. That's why today, we compiled several restaurant chains that are in deep trouble and may close doors for good in next few months."
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