Sales from the Top 500 restaurant chains grew by 7.8% in 2023, according to recently released Technomic data. Further, the domestic footprint of the Top 500 chains increased by 1.8% in 2023 to a total of more than 233,000 restaurants. This marked the highest rate of new location growth since 2016.
That doesn’t mean it was all rainbows and butterflies for the industry, however. Much of the unit growth was paced by a handful of players, like Jersey Mike’s, 7 Brew, and Crumbl, while much of the sales were driven by higher prices. And, as the overall count of Top 500 locations grew, nearly 33% of ranked chains experienced a net decrease in locations in 2023 — an uptick in chain closure rates versus both 2022 and 2021.
All told, there were 17 chains that experienced a double-digit unit count retrenchment from 2022 to 2023, including:
- Church’s Texas Chicken closed 13% of its system last year, going from 925 in 2022 to 805.
- California Pizza Kitchen is also 13% smaller, ending 2023 with 140 locations.
- TGI Friday’s is over 20% smaller, and now counts about 230 restaurants.
- O’Charley’s closed nearly 55% of its system in 2023 and now has just 64 locations.
- Corner Bakery is nearly 25% smaller, finishing 2023 with just over 100 locations after filing for bankruptcy in February last year.
- Boston Market retrenched by nearly 68% in 2023, going from nearly 350 restaurants in 2022 to just 91.
- Uno Pizzeria is over 10% smaller, finishing 2023 with 68 locations.
- Friendly’s also closed about 10% of its system in 2023, finishing the year with 108 locations.
- Shoney’s system is nearly 13% smaller, going from 94 locations to 82 in 2023.
- Au Bon Pain went from 100 units in 2022 to 55 in 2023, a 45% drop.
- Which Wich is 12.3% smaller than it was in 2022, from 220 to 193.
- Joe’s Crab Shack is nearly 19% smaller, going from 37 locations in 2022 to just 30 in 2023.
- Grand Lux Café finished 2023 with seven locations, a 22.2% decline from its 9-unit footprint in 2022.
- Romano’s Macaroni Grill is 16.2% smaller year-over-year, finishing 2023 with 31 locations.
- Fuddruckers finished 2023 with 55 locations, a 21.4% decrease from 2022.
- Johnny Carino’s is 14.3% smaller, finishing 2023 with 30 locations, from its 35-unit footprint the year prior.
- Quiznos’ 142 unit count at the end of 2023 equates to a 14.5% drop from its 2022 footprint.
Unfortunately, 2024 so far seems to be just as unkind (if not more). Consider high-profile bankruptcies from Red Lobster, Rubio’s, and Tijuana Flats, for instance. Those filings are coming with significant closures; in Red Lobster’s case, there could be over 100 closures, while Rubio’s shuttered nearly 50 locations in California alone. We know some chains that aren’t filing for bankruptcy are also planning to close a sizable chunk of restaurants this year; Outback Steakhouse and Applebee’s are two such examples. As such, we’ve seen some loud opinions about the industry’s “death knell” or “apocalypse.” Are these closings and bankruptcies a concern? Yes. The industry is still very much working its way out of the complexities created by the pandemic and there are plenty of ominous headlines to support these opinions. It certainly doesn’t help that interest rates haven’t budged, creating a precarious predicament for many concepts that took on debt to merely survive 2020 and 2021.
Is this environment apocalyptic? No. The pendulum in this industry always swings back and forth (see, for example, 2017’s wave of closures) and that is likely what’s happening now after a post-pandemic renaissance in late 2021 through early 2023. Plus, there are plenty of silver linings to latch onto. The industry itself is expected to surpass the $1 trillion mark in sales for the first time ever this year. We’re getting plenty of pitches from concepts signing their biggest development deals ever, including from legacy brands like Captain D’s and Potbelly. We’re also seeing a ton of innovative specialty brands generating a ton of interest from consumers – brands like Swig, Hawaiian Bros Island Grill, Cava, Dutch Bros, Gen Korean BBQ, Salad and Go, Smalls Sliders, Savvy Sliders, Mo’Bettahs, Kura Sushi, and so on and so forth.
That said, things will look a lot different than they did the last time the pendulum's bob shifted, and the industry will have to adjust itself accordingly. Recovery remains sluggish in city centers as work-from-home trends solidify, for example, while consumer preferences are tilting strongly in favor of limited-service formats. Further, traffic may have hit a ceiling due to lower population growth combined with an aging population. That latter point – what Technomic’s senior principal and VP of innovation Rich Shank in April called “constrained demographics” – may have the biggest long-term impact on the industry. Less people eating out can’t be solved by check/channel growth alone.
This could mean the latest rounds of closures could better meet available demand. What it absolutely means is the fight for share of stomach is about to become even more intense and operators are going to need to get even more creative to hold court.
Contact Alicia Kelso at [email protected]
