The restaurant industry faced significant challenges in 2024 as many consumers reduced their spending due to inflation, leading to a decline in visits across the U.S. This trend resulted in weak sales and a notable increase in bankruptcies, with 26 restaurant companies filing for Chapter 11 protection, a sharp rise from previous years. Casual dining establishments, in particular, struggled to attract customers as diners shifted their preferences towards fast-casual options, which offer convenience and quality.
Several prominent restaurant chains announced closures to streamline operations and enhance profitability. Wendy’s declared plans to close 140 underperforming locations by the end of 2024, building on earlier closures of 80 stores within the year. The company’s CEO noted that despite these closures, new openings would maintain the overall number of restaurants.
Applebee’s also faced difficulties, announcing the closure of 25 to 35 locations due to a decline in same-store sales over the past six quarters. This trend is consistent with the parent company’s track record of more closures than openings in recent years.
Denny’s planned to shut about 50 stores in 2024 and an additional 100 by 2025, focusing on underperforming locations in an effort to bolster sales across remaining establishments. TGI Fridays filed for bankruptcy after closing 86 restaurants earlier in the year, with expectations of further reductions in their footprint. Similarly, Red Lobster experienced setbacks that led to the shuttering of over 120 locations following bankruptcy proceedings.
These closures reflect broader trends in the restaurant industry as chains adapt to changing consumer behaviors and economic pressures.Noodles & Company recently announced plans to close around 20 of its 475 locations as part of a broader review aimed at improving operational efficiency and financial performance following several challenging years. The company is also revamping its menu by eliminating less popular items and introducing new dishes intended to attract a wider customer base. However, the company’s efforts may take time to yield results, as it reported a 3.3% decline in same-store sales during the most recent quarter.
Similarly, Bloomin’ Brands, the parent company of restaurants such as Outback Steakhouse and Carrabba’s Italian Grill, has also made significant changes by closing 41 underperforming locations in 2024. These closures primarily impacted older establishments with leases originating in the 1990s and early 2000s. The decision was based on an evaluation of sales performance, customer traffic, and the cost of necessary improvements. As with Noodles & Company, Bloomin’ Brands has faced challenges in sales growth, reporting a 1.5% decline in same-store sales in the third quarter. Both companies illustrate the current struggles within the casual dining industry as they work to adapt to changing consumer preferences and market conditions.