Is a restaurant recession in our near future? With overall sales declining and more customers opting for takeout and delivery, it’s no wonder we see many of our favorite, time-honored restaurants hitting the panic button.
Restaurants are struggling to attract customers. When customers do sit down to a meal, they prefer trendy, local spots. Some franchises, such as Red Lobster, are winning the battle, while others are on the brink of collapse. Read on for 15 restaurants that might not be around much longer.
Subway closed a record number of restaurants in 2016. After a sales slump of 1.7%, the pioneers of the footlong resorted to closing 359 U.S. locations. This came after a lackluster attempt to attract customers with new, healthier sandwich options and hiring new management staff to soften the company’s recent PR blows.
Next: Why profits aren’t exactly blooming for Outback
2. Outback Steakhouse
Bloomin’ Brands owns Outback, as well as other popular restaurant chains Carrabba’s Italian Grill and Bonefish Grill. All three restaurants reported negative 2016 sales, but Outback was hit hardest at a 4.8% decline. The Bloomin’ management is also predicting a flat 2017 as more customers are flocking to take-out and delivery services. For that reason, it plans to close 43 stores nationwide in 2017.
Next: Your neighborhood grill is probably closing.
DineEquity is in for a rough year, as both Applebee’s and IHOP saw sales dip in 2016. Applebee’s took the cake, as sales dropped a staggering 5%. It’s struggling to attract customers to an industry where fewer families are eating out. As a result, it’s expected to close around 60 restaurants in 2017 to account for continued troubles.
Next: Surprising results from Shake Shack
4. Shake Shack
Despite attracting a lot of younger customers, Shake Shack recently failed to beat industry sales expectations. Growth was also slower than expected. Still, the restaurant has high hopes for 2017, looking to attract an audience with the addition of the Chicken Shack sandwich and expanding to over 450 stores nationwide.
The CEO also noted lower 2016 earnings were the result of higher starting wages for its employees, offering regular staff between $10.50 and $12 per hour and team leaders between $12 to $15 per hour.
Next: Chili’s is struggling to make a profit.
Chili’s is looking to revamp its advertising campaigns to attract new customers after Brinker International (which owns Chili’s and Maggiano’s Little Italy) reported falling profits. New and creative digital marketing initiatives are slated to cater to younger crowds and support a menu of 20 fewer items.
Next: Ruby Tuesday is closing a bunch of restaurants.
6. Ruby Tuesday
Ruby Tuesday is seeing less business in 2017. The national casual dining chain reported an 18% profit loss in 2016 year over year. As a result, it was forced to close 109 locations nationwide and is looking to sell even more. In addition to reviewing resumes for a new CEO, the company is desperately trying to win back loyal business with new menu items.
Next: What’s up with Starbucks?
Starbucks isn’t going anywhere. But it did have slower than expected sales in 2017, with American store sales only increasing by 3%. At one point, Starbucks enjoyed 25 straight quarters with earnings exceeding 5% growth — until recently when it lost customers due to PR blunders. Its popularity sank when it announced its mission to hire 10,000 refugees in protest of President Donald Trump’s immigration ban. But judging by the popularity of the Unicorn Frappuccino, it looks like Starbucks still has a bright future.
Next: Sonic’s restaurant woes
Even America’s favorite drive-in can’t be sheltered from a sinking restaurant industry. Quarterly reports broadcasted shrinking sales by 8.9% due to a massive decline in customers. The CEO cited bad weather and sluggish spending as reasons for a flat net income of $11 million but hoped new products aimed at “price-sensitive” customers would help revive the franchise.
Next: Why Domino’s is struggling to attract customers
Typically one of the strongest restaurant chains in the nation, Domino’s saw slowed growth in the first quarter of 2017, especially when compared to its stellar double-digit 2016 performance. The company places blame on its rival, Pizza Hut, for its aggressive January, cautious spending habits, and competitive pricing. Much of Domino’s profits are made in the U.K., but residents there are quite bitter about the decision to eliminate the cookie from “meal deal” options.
Next: Beer and wings won’t save you at this next restaurant.
10. Buffalo Wild Wings
Th fact that Buffalo Wild Wings is struggling comes at no shock, as competition increases and customers become more careful with their money as food costs rise. The company is projected to raise wing prices by as much as 10% to account for slower revenue. A dismal March Madness is also prompting it to evaluate other menu options. So don’t be expecting any new joints to open in your neighborhood anytime soon.
Next: Who has Krispy Kreme acquired?
11. Panera Bread
Panera makes its fortune introducing healthy food options at a faster rate than most of its competitors. But shockingly, it was just acquired by the doughnut mogul, Krispy Kreme. 2016 saw declining sales, and 2017 has seen a slight decline in franchise-owned stores so far. Restaurants hope to bring back more customers with the rollout of Panera 2.0 that will include fast lane kiosks, rapid pickup, and mobile ordering.
Next: Jack in the Box blames Uncle Sam for its restaurant struggles.
12. Jack in the Box
Jack in the Box is having a rough 2017 when it comes to generating business, but apparently, taxes are to blame. CEO Lenny Comma said in a press release, “We believe some of this slowdown may be attributable to delayed tax refunds, as well as record rainfall and flooding in California over the past few weeks which have impacted our Jack in the Box results.”
Next: Chipotle’s continuing conundrums
The management at Chipotle is fighting an uphill battle as it tries to regain customers’ trust and loyalty after multiple food scares, including an E. coli outbreak, sickened its customers. Luckily, 2017 is showing promise. Sales increased 17.8% in the first quarter, but that’s still not enough to recover from 2016. To make up the difference, it’s introducing chorizo as a topping and “free burrito” coupons.
Next: A struggling eatery takes to Twitter.
14. TGI Fridays
TGI Friday’s is in strict competition with its casual dining counterparts, such as Chili’s and Applebee’s, all of whom are struggling to attract restaurant customers. CEO John Antioco told Business Insider, “When you look at the alternatives out there in the marketplace today and who’s creating buzz and creating excitement, it’s gone away from chain casual dining.” Nonetheless, Friday’s is attempting to rebrand by catering to the younger generation with a pub-like atmosphere and offering ordering options via Twitter.
Next: The restaurant that can’t recover from a data breach
15. Noodles & Company
Noodles & Company is being forced to shutter 55 of its stores, which is roughly 10% of its total locations. While management claims some stores have performed well, others are dragging the company down with consistently weak performance. And it looks like it will need that extra cash flow. A recent data breach is reported to cost the company $11 million.
Follow Lauren on Twitter @la_hamer.