The Great Recession had lasting effects, ranging from long-term joblessness and declining business dynamism. Enterprise suffered as well, with many businesses going under. Others have managed to make it through, albeit it by switching strategies. In the restaurant industry, a drastically different set of obstacles has emerged — including new labor rules and high food prices.
Some in the food industry have been operating at a heightened threat level for many years now. Though people still love fast-food, fast-casual eateries and formal restaurants were hit fairly hard by the evolving state of the market. Many have recovered, but things continue to churn.
For example, chains like The Olive Garden and Red Lobster are or looked to be nearing the end of their lifespan. They’ve since recovered, though that has a lot to do with external economic conditions.
During the 1980s and 1990s, many restaurant chains set their sights on the middle class, offering reasonably priced meals that entire families could enjoy and afford. But as the middle class shrinks and inequality becomes more of an issue, these chains are hemorrhaging customers, and it’s ultimately going to doom them. Another product of less-than-ideal economic conditions is rising food prices. There have been a variety of factors behind skyrocketing prices for food, including climactic conditions and tighter regulations. As a result, consumers and businesses are feeling the pinch.
Many restaurants simply haven’t been able to absorb the costs without switching gears. You’ll notice that certain fast food restaurants have bumped up prices over the past few years, for example. If they crank the dial too much, though, consumers will just find another place to eat if they feel prices are too high. And the cutthroat world of food offers consumers alternatives almost everywhere they look.
For these 10 restaurants, the struggle continues. And unless they can find ways to cope with rising labor and food prices while also retaining their customer base, they’re cooked.