2025 has been a rough year for restaurants.
So much so that we’re increasingly seeing restaurants throw in the towel and say, “Enough. I’m done.”
Let’s face facts, they’ve got a lot working against them right now…
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Whenever I read about restaurants struggling, I feel like tariffs and food cost inflation are two of the key things that get brought up.
And that’s of course because – they’re real issues!
But there’s so much more going on under the hood that is squeezing restaurants from all directions.
As just one example…
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Millennials and Gen-Z are pushing toward more healthy eating!
It’s not easy for chain restaurants to just suddenly reinvent their menus overnight.
Local, fresh ingredients are harder to source, and they spoil more easily too.
(Which, again, drives food costs.)
And, not to pile on, but…
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As you likely know, stubbornly high inflation and the trade war are helping keep interest rates higher.
(If you’ve applied for a mortgage recently, you know exactly what I’m talking about.)
Well, many restaurants carry debt from happier times when they were financing aggressive expansion…
And often that debt is “floating-rate”, meaning that the interest rate adjusts up more or less in tandem with broader interest rates.
So at a time when restaurants are particularly vulnerable…they’re also paying more interest on debt.
Not great.
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The pandemic accelerated a long-term shift in favor of takeout and away from people sitting in restaurants.
The rise of delivery apps like DoorDash and UberEats has only intensified that shift, and it has presented chain restaurants in particular with a new challenge:
If anyone can open up an app and scroll through dozens of restaurant options…
They won’t necessarily feel as bound to “the same place we always go.”
Especially if they’re just getting takeout anyway.
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All of these factors combine to make for a tough macro environment for chain restaurants.
It’s no surprise several chains have decided that the best answer is to radically downsize.
But I will say – some of these are real heartbreakers:
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Denny’s, also known as “America’s Diner,” has been serving up delicious breakfasts (ok, sure, and other food – but really, we all go to Denny’s for breakfast, right?) for decades.
Unfortunately, due to all the issues I mentioned above…Denny’s has fallen on hard times.
I also think a piece of it is that Denny’s started taking their most loyal customers for granted.
Regardless of the source, the pain is real:
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Denny’s has announced plans to close roughly 150 restaurants by the end of this year, reducing their store count by about 10%.
In addition to the negative impacts on consumers – hundreds of thousands of whom will lose convenient access to a local Denny’s – it means thousands of loyal staffmembers suddenly left without a job.
Terrible news, end to end.
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TGI Fridays declared bankruptcy late last year and immediately began slashing store count.
(They’d been shrinking for years prior, as far too many chain restaurants have been.)
They’ve already closed more than 30 locations this year, leaving the restaurant with only 85 locations left in the US (from a high of nearly 600 back in 2008).
That’s more staff having to find a job in an increasingly tough economy.
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Red Robin’s also been on a downward slide for years, as tons of new burger concepts have popped up and made its menu look…well…
A little tired.
And far too expensive.
Management is closing 10-15 restaurants this year, with plans for up to 70 closures in the years to come.
Just rough news, all around.
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Like TGI Fridays, Hooters is another “closing stores due to bankruptcy” story.
Immediately after filing for bankruptcy just a few weeks ago, it promptly closed at least 30 locations in 14 states.
And given that it’s drowning under a pile of debt and has plenty of underperforming restaurants…I’m unfortunately confident there are far more closures coming.
It’s a shame – I always loved their wings, but Hooters just never really updated their menu, you know?
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Bahama Breeze is a relatively small (tropical-themed) concept owned by Darden Restaurants (owner of Olive Garden and LongHorn Steakhouse), and it unfortunately just got a whole lot smaller.
More specifically, Bahama Breeze just shut down 15 locations (which is over 1/3 of its total restaurants) and left Nevada, Tennessee, Massachusetts, and even New York.
It’s a tough reality out there, as far too many staff just found out to their chagrin.
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I just really want to take a moment and call attention to two groups of people I feel awful for in this situation:
Staff, and loyal customers.
Many people made their living at these restaurants for years and even decades, and they deserved better.
And plenty of customers were loyal through to the end, built routines around visiting, and made beautiful memories of birthdays and friendships and good times.
All of these people deserved better.
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If you fall into either group, you have my sincerest sympathy.
I hope the next chapter is better than this last one.
And if you live in an impacted community, where do you see people eating now?
Let us know in the comments!
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