Is a restaurant recession in our near future? With declining sales and customers opting for takeout and delivery, it’s no wonder we see many time-honored restaurants hitting the panic button. 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 17 restaurants that might not be around much longer.
Sign of the end: 8.9% sales loss in 2017
Even America’s favorite drive-in isn’t safe from a hurting restaurant industry. Quarterly reports broadcasted shrinking sales by 8.9% due to a massive decline in customers. The CEO blamed bad weather and sluggish spending for its flat net income of $11 million but hopes new products for “price-sensitive” customers can revive the franchise.
Next: The all-you-can-eat concept isn’t appealing anymore.
2. Ovation Brands
The owner of Hometown Buffet, Old Country Buffet, and other all-you-can-eat restaurants has declared bankruptcy three times in the last nine years. It also had to pay a Nebraska man more than $11 million when he got salmonella poisoning at a buffet location.
Between the lawsuit and the poor strategy of selling a lot of food for little money, Ovation Brands recognizes it’s in trouble. They face a more recent lawsuit from former employees who allege that Ovation gave no advance notice before closing many locations and eliminating their jobs.
Next: This restaurant hasn’t recovered from a data breach.
3. Noodles & Company
Sign of the end: 55 locations closed
Noodles & Company had to shutter 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 Noodles needs that extra cash flow; a recent data breach reportedly cost the company $11 million.
Next: Krispy Kreme acquired this restaurant chain.
4. Panera Bread
Sign of the end: an expected 2% sales loss in 2017
Panera introduces healthy meals at a faster rate than many competitors. But shockingly, doughnut mogul Krispy Kreme recently acquired it. Last year saw declining sales, and 2017 sees a slight decline in franchise-owned stores so far. Restaurants hope to attract customers with Panera 2.0, which includes fast lane kiosks, rapid pickup, and mobile ordering. So far, so good.
Next: Profits aren’t bloomin’ at this restaurant.
5. Outback Steakhouse
Sign of the end: 9 Outback restaurants closed
Bloomin’ Brands owns Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill. All three restaurants reported negative 2016 sales, but Outback’s 4.8% decline hit hardest. Bloomin’ management also predicts a flat 2017 as customers flock to take-out and delivery services. Bloomin’ Brands plans to close 43 of its 1,500 restaurants nationwide. (including Outback, Carrabba’s and Bonefish Grill locations.) At last count, nine were Outback Steakhouses specifically.
Next: “Eat fresh” no more?
Sign of the end: 359 locations closed
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: Reviving this casual dining chain won’t be a piece of cake.
7. Cheesecake Factory
Sign of the end: Stock is down 29.5% for the year.
This restaurant is famous for food comas thanks to its sinful, high-calorie dishes. This makes Cheesecake Factory unimpressive to many demographics, including millennials and families. Throw in the restaurant location issue — in malls and suburbs — and you’ve got a recipe for declining sales. Cheesecake Factory’s stock is struggling as a result.
Next: People don’t want to “eat good in the neighborhood.”
Sign of the end: 105–135 closed locations by the end of 2017
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. Originally, it expected to close around 60 restaurants in 2017 to account for continued troubles. But the chain’s parent company, DineEquity, announced that it needs to close double that amount this year instead.
Next: The fall of the burrito
Sign of the end: 20% stock decrease as of August 2017
Chipotle is fighting an uphill battle as it tries to regain customers’ trust after many food scares, including an E. coli outbreak, sickened customers. Luckily, 2017 shows promise. Sales increased in the first quarter, but it’s not enough to recover from 2016. To help profits, Chipotle introduced chorizo and queso as toppings as well as “free burrito” coupons.
Next: This restaurant’s “license to grill” might get revoked.
Sign of the end: 2.3% sales loss in the third quarter of 2017
Chili’s hopes to revamp its advertising campaigns to attract new customers after Brinker International (owner of Chili’s and Maggiano’s Little Italy) reported falling profits. New digital marketing initiatives slated to cater to younger crowds will support a menu of 20 fewer items.
Next: Beer and wings won’t save this restaurant.
11. Buffalo Wild Wings
Sign of the end: 2.4% sales loss in 2016
Buffalo Wild Wings’ struggles don’t shock us. Customers are careful with their cash as restaurant competition and food costs increase. BWW is projected to raise wing prices by as much as 10% to account for slow revenue. A dismal March Madness also prompted it to evaluate its menu. Don’t expect a new joint to open in your neighborhood anytime soon.
Next: This restaurant is drowning in competition.
12. TGI Fridays
Sign of the end: $16.5 million sales loss in 2016
TGI Friday’s competes with casual dining chains like Chili’s and Applebee’s — all are struggling to attract diners. 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 a younger generation with a pub-like atmosphere and ordering options via Twitter.
Next: This pizza chain needs a bigger piece of the profit pie.
Sign of the end: 20% stock decrease as of July 2017
Typically one of the strongest American restaurant chains, Domino’s growth slowed in 2017, especially compared to its stellar double-digit 2016. The company blames its rival, Pizza Hut, for an aggressive January, cautious spending habits, and competitive pricing. The U.K. generates a lot of Domino’s profits, but residents are bitter about eliminating the cookie from “meal deal” options.
Next: This trendy burger joint isn’t growing as fast as predicted.
14. Shake Shack
Sign of the end (or not): 36.6% increase in second quarter of 2017
Despite attracting younger customers, Shake Shack failed to beat industry expectations in 2016. Growth was slower than expected. The restaurant hopes to attract diners with a new Chicken Shack sandwich and expanding to over 450 stores nationwide. The CEO noted that lower 2016 earnings resulted from higher starting wages for employees. They offered staff between $10.50 and $12 per hour and team leaders between $12 to $15 per hour.
Next: This restaurant needs to overcome its outdated reputation.
15. Ruby Tuesday
Sign of the end: 109 locations closed
Ruby Tuesday sees less business in 2017. The national casual dining chain reported an 18% profit loss in 2016 year over year. As a result, it closed 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: A fast food joint blames Uncle Sam.
16. Jack in the Box
Sign of the end: just 3.1% sales growth as of early 2017
Jack in the Box is having a rough 2017, 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: This coffee powerhouse did not have a “unicorn” year.
Sign of the end: only 3% growth
Okay, so Starbucks isn’t going anywhere. But it did have slower than expected American store sales in 2017. At one point, Starbucks enjoyed 25 straight quarters with earnings exceeding 5% growth — until it lost customers due to PR blunders. The coffee chain’s popularity sank when it announced its mission to hire 10,000 refugees in protest of President Donald Trump’s immigration ban.
Follow Lauren on Twitter @la_hamer.
Additional reporting by Ali Harrison.