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.
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: Why profits aren’t exactly bloomin’…
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’s 4.8% decline hit hardest. Bloomin’ management also predicts a flat 2017 as more customers flock to take-out and delivery services. For that reason, it plans to close 43 stores nationwide in 2017.
Next: Beer and wings won’t save this restaurant.
3. Buffalo Wild Wings
Th fact that Buffalo Wild Wings is struggling comes at no shock. Customers are becoming more careful with their money as restaurant competition increases and food costs rise. BWW is projected to raise wing prices by as much as 10% to account for slower revenue. A dismal March Madness also prompted it to evaluate other menu options. So don’t expect any new joints to open in your neighborhood anytime soon.
Next: The fall of the burrito
Chipotle management 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 shows promise. Sales increased 17.8% in the first quarter, but that’s not enough to recover from 2016. To make up the difference, Chipotle introduced chorizo as a topping and “free burrito” coupons.
Next: This is how you struggle.
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: This restaurant’s “license to grill” might get revoked.
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: A fast food joint blames Uncle Sam.
7. 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: This restaurant needs to overcome its outdated reputation.
8. 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: Who has Krispy Kreme acquired?
9. Panera Bread
Panera makes its fortune introducing healthy food options at a faster rate than many competitors. But shockingly, the doughnut mogul Krispy Kreme recently acquired it. Last year saw declining sales, and 2017 has seen a slight decline in franchise-owned stores so far. Restaurants hope to bring back customers with the roll-out of Panera 2.0, which includes fast lane kiosks, rapid pickup, and mobile ordering. So far, so good.
Next: This restaurant is drowning in competition.
10. TGI Fridays
TGI Friday’s is in strict competition with its casual dining counterparts, such as Chili’s and Applebee’s; all 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 ordering options via Twitter.
Next: “Pizza delivery experts” no more?
Typically one of the strongest restaurant chains in the nation, Domino’s growth slowed in early 2017, especially compared to its stellar double-digit 2016. The company blames its rival, Pizza Hut, for its aggressive January, cautious spending habits, and competitive pricing. The U.K. generates much of Domino’s profits, but residents there are bitter about the decision to eliminate the cookie from “meal deal” options.
Next: This trendy burger joint isn’t growing as fast as predicted.
12. Shake Shack
Despite attracting 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 new Chicken Shack sandwich and expanding to over 450 stores nationwide.
The CEO also noted that lower 2016 earnings resulted from higher starting wages for employees. They offered regular staff between $10.50 and $12 per hour and team leaders between $12 to $15 per hour.
Next: Most diners aren’t “eating fresh.”
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: This restaurant hasn’t recovered from a data breach.
14. Noodles & Company
Noodles & Company had to shutter 55 of its stores (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: This coffee powerhouse did not have a “unicorn” year.
Okay, so 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 it recently 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. But judging by the popularity of the Unicorn Frappuccino, it looks like Starbucks still has a bright future.
Follow Lauren on Twitter @la_hamer.