Tyronne Stoudemire’s Post

The restaurant industry is currently not in an apocalyptic state despite recent challenges. Historically, the industry has experienced cycles of growth and decline, such as the wave of closures in 2017. Similar adjustments are likely occurring now after a resurgence following the pandemic from late 2021 to early 2023. Despite ongoing changes, there are positive signs like the industry approaching $1 trillion in sales for the first time and major brands securing substantial development deals. However, the landscape is evolving. City centers are slow to recover due to remote work trends, and consumer preferences are increasingly favoring limited-service formats. Additionally, demographic factors like an aging population and slower population growth are impacting restaurant traffic. As a result, the competition for market share in the restaurant industry is intensifying, requiring operators to innovate more than ever to maintain their position.

Major Restaurant Chains That Have Closed Down Locations Across The U.S. In 2024 By Jack Kelly A mix of underperformance issues, financial pressures from inflation, strategic realignments, changing consumer trends and overall cost-cutting objectives have all contributed to the recent wave of location closures across several restaurant chains in 2024. Major chains including TGI Fridays, MOD Pizza, Outback Steakhouse and Applebee's cited “underperformance” as the main reason for closing certain restaurant locations. They are strategically shuttering stores that are not meeting sales and profit expectations. Other chains, like Boston Market, Red Lobster and Tijuana Flats, have closed locations due to severe financial troubles, unpaid bills, landlord disputes and even bankruptcy filings. Their closures are directly tied to efforts to cut costs and restructure amid money problems. Denny's specifically cited inflation-related challenges, like higher costs, as a factor forcing it to close 57 locations in 2023 and planning 10 to 20 more closures in 2024, according to a February earnings call. Some restaurant closures have been driven by shifts in customer preferences and dining behaviors that have made certain locations less viable. For chains facing financial headwinds, closing underutilized locations is a way to reduce costs and shore up their finances through restructuring. https://lnkd.in/ejK6k6gf

For restaurant concepts looking to open additional units I would suggest reading the article below from Modern Restaurant Management (MRM) magazine. It outlines what to research before you grow as well as how to hire and retain your staff during your expansion.

Restaurants Execute Expansion Plans with Measured Approaches To say that the restaurant industry is sending mixed signals could be the understatement of the year. The National Restaurant Association expected restaurant sales in 2024 to top $1 trillion for the first time ever. But as the year has progressed, the number of operators who anticipated sales growth in the coming months dipped to 28 percent in August from 40 percent in April amid inflation and economic uncertainty, according to the organization’s latest performance index survey. At the same time, the fortunes of the major restaurant segments are largely diverging as consumer preferences change and new technologies enhance the convenience of digital ordering and delivery. Full-service operators such as Denny’s and TGI Friday’s are closing locations, while many quick-service and fast-casual restaurants continue to pursue ambitious expansion plans, notes Jonathan Lapat, a managing principal with SRS Real Estate Partners in Boston. Raising Cane's Chicken Fingers Cane’s, for example, anticipates opening 100 restaurants in 2024 alone by year’s end, and it wants to open as many in 2025 to increase its location count to 1,000.  https://lnkd.in/drMaivby Sponsored by SRS Real Estate Partners #cre #commercialrealestate #restaurant #retail

Major Restaurant Chains That Have Closed Down Locations Across The U.S. In 2024  by Jack Kelly Forbes A mix of underperformance issues, financial pressures from inflation, strategic realignments, changing consumer trends and overall cost-cutting objectives have all contributed to the recent wave of location closures across several restaurant chains in 2024. Major chains including TGI Fridays, MOD Pizza, Outback Steakhouse and Applebee's Neighborhood Grill + Bar's cited “underperformance” as the main reason for closing certain restaurant locations. They are strategically shuttering stores that are not meeting sales and profit expectations. Other chains, like Boston Market, Red Lobster and Tijuana Flats Tex-Mex Flats, have closed locations due to severe financial troubles, unpaid bills, landlord disputes and even bankruptcy filings. Their closures are directly tied to efforts to cut costs and restructure amid money problems. Denny's specifically cited inflation-related challenges, like higher costs, as a factor forcing it to close 57 locations in 2023 and planning 10 to 20 more closures in 2024, according to a February earnings call. https://lnkd.in/ewJ9hU4H 

Headwinds and pain points: A survey of 600 full-service restaurant owners, CEOs, general managers, and area managers from across the U.S. reveals that despite continued headwinds and challenges, 94 percent of operators still have expansion plans for this year. According to TouchBistro's 2024 State of Restaurants Report, the top pain points that operators are facing this year are: -Inventory costs: 58 percent of those surveyed said this was their number one concern, and 60 percent of operators reported that all or most of their suppliers have raised prices this year. -Menu prices: In response to inventory cost increases, 67 percent of restaurateurs have raised their menu prices in the past year. -Staff turnover: While the staffing shortage has eased, with roughly 82 percent saying they were short at least one position, turnover rates remain at 28 percent for all full-service restaurants and 34 percent for brands with five or more locations. -Commission fees: 46 percent of operators added more off-premises ordering options to boost profits, yet nearly a quarter report paying more than 20 percent in commission fees for each order.

Why do the majority of restaurants shut down within two years? Many factors can contribute to the closure of restaurants within their first two years of operation. Financial mismanagement - Starting and maintaining a restaurant requires significant capital, and many new restaurant owners underestimate the costs involved, including rent, utilities, wages, and supplies. Highly competitive industry - With so many dining options available, it can be challenging for a new restaurant to attract and retain customers. Additionally, a lack of proper marketing can result in insufficient customer awareness and patronage. Operational inefficiencies - such as poor service, inconsistent food quality, and inadequate staff training, can also lead to a restaurant's downfall. Customers expect a certain level of service and quality, and failing to meet these expectations can result in negative reviews and a loss of business. Market saturation - In areas with an abundance of dining options, standing out becomes even more difficult. This is compounded if the restaurant lacks a unique selling proposition or fails to adapt to local tastes and preferences. How can we overcome this challenge? Please share your thoughts in the comments.

With the drastic amount of restaurant closings and bankruptcies, experts are predicting a move to dual-branded restaurants much like the KFC/Pizza Huts or Taco Bell/Long John Silver’s of the late 90’s and early 2000s. Imagine going to an AppleHop (Applebees & IHOP) or Buffalo Wild WingStop or ChiliChipotle or JimmyJohnnyRockets or RubyCorral Buffet or Carrara’s Outback? I’m noticing a trend in my zip code with restaurant groups snatching up multiple restaurants in the area and divvying up the staff between multiple locations. You work 2 days at X, 2 days at Z, and if you could work one day at Y that’s great also. If they keep purchasing all the restaurants, they might end up combining them into one if business starts failing. https://lnkd.in/eKJxq8G5

I honestly think our qsr and restaurant industry in general is in trouble as costs are too high and value can't keep up. Experiential dining may not be affected like high end restaurants that offer a great celebration location or the standard value restaurants like Taco Bell will always fit a need for those looking for super affordable. But the chains that are idle and not changing the customer experience are slowing losing market share and growth capabilities to the new fresh concepts. The other part is locations. We have had a stall in retail development which has driven prices up and foot traffic down. As an example look at the retail space west of 31 on SR 32. Most of those concepts were developed and created on high density markets and not completely reliant on drive through business. As an owner of a couple of pizzeria's I can first hand tell you that the business model for regular old food is not really there any more.