On July 1, we recapped the first half of the year, observing that the industry was suffering a bit of a renaissance hangover from a robust 2022 and 2023.
Bankruptcies – including Rubio’s, Red Lobster, and Tijuana Flats – dominated headlines from January through the end of June, as did mass closures, while a value war was just starting to manifest after a surprisingly weak second quarter. Those stories unfortunately haven’t waned much, though there seems to be some growing momentum and signs of consumers returning.
Before we put a final bow on this very strange, very challenging 2024, here’s a look at some of the things we were talking about from July through December.
CEO shuffle
One of the biggest executive shifts in industry history came in mid-August, when Chipotle’s Brian Niccol was named Starbucks CEO. Chipotle’s performance under Niccol’s leadership since 2018 has been nothing short of meteoric, while Starbucks has been struggling for the past couple of quarters. Niccol replaced Laxman Narasimhan, who was on the job for just 17 months.
Meanwhile, Chipotle gave Scott Boatwright the permanent CEO title in November, after previously serving as chief operating officer since 2017.
Notably, it wasn’t the only major CEO announcement in H2 2024. In August, Papa Johns named former Wendy’s CEO Todd Penegor as its new leader. Bloomin’ Brands, Whataburger, Walk-On’s Sports Bistreaux, Artistry Restaurants, Golden Krust, Togo’s, Tropical Smoothie, CKE, Tacodeli, Tom’s Watch Bar, Duffy’s Sports Grill, Clean Eatz, and Bluestone Lane are some other brands that named new leaders during the second half of the year.
A deadly E. coli outbreak
One of the biggest – if not the biggest – stories from 2024 came in October, when the Centers for Disease Control and Prevention named McDonald’s as the source of a deadly E. coli outbreak impacting about 900 restaurants, and sickening over 100 people, including one fatality. Though McDonald’s identified and removed the source quickly, and the crisis was officially declared over in early December, any such outbreak has a ripple effect on the entire industry’s reputation, and it will take some time to regain trust.
For the McDonald’s business, the timing couldn’t have been worse. In July, the chain reported its first same-store sales decline since the pandemic, triggering a more aggressive approach to value through its $5 Meal Deal.
Bankruptcies continued …
Red Lobster wasn’t the only big name seeking bankruptcy protection this year. During the latter six months, that list grew to include Fired Pie, Oath Pizza, Tender Greens and Tocaya, Pizza Hut franchisee EYM, Roti, BurgerFi, Hawkers Asian Street Food, Original Harrold’s Chicken, TGI Fridays, Eegee’s, and more.
… As did closures
Plenty of systems retrenched this year as well, with some brands shuttering all of their locations, including Hart House and Shari’s Café and Pies, and others closing many locations, including Big Boy and Hooters. Other brands like Wendy’s, Shake Shack, Noodles & Company, and Denny’s accelerated closures with the goal of getting back to healthy growth.
M&A slow, but not completely dormant
Meanwhile, several struggling brands hit the market, despite a relatively slow year for mergers and acquisitions. MOD Pizza, for instance, explored options to improve its capital structure in July before agreeing to a sale to Elite Restaurant Group.
Red Lobster was acquired by RL Investor Holdings, an entity backed by Fortress Investment Group, while also putting a new leadership team in place led by CEO Damola Adamolekun. Rubio’s, meanwhile, was sold to its lender, the Original Fish Taco, in August.
Other deals included Sun Holdings’ acquisition of Freebirds World Burrito, Saga Hospitality Group’s acquisition of Alex Seidel’s Mercantile Provisions, Sycamore Partners’ acquisition of Playa Bowls, KBP Brands acquisition of 85 Sonic Drive-In locations. Thrive Restaurant Group’s acquisition of Modern Market Eatery, Flynn Group’s acquisition of 13 Paneras and 32 Wendy’s, Craveworthy Brands’ acquisition of Fresh Brothers Pizza, Savvy Sliders’ acquisition of BurgerFi, and more.
But perhaps the biggest acquisition of the year, aside from Roark’s nearly $10 billion acquisition of Subway in April, was with Blackstone’s majority stake in Jersey Mike’s in November (following Blackstone’s acquisition of Tropical Smoothie Cafe in June).
Spinoffs
Perhaps many years from now, we’ll look back at 2024 as the year when McDonald’s expanded its specialty beverage concept CosMc’s, when Taco Bell launched Live Más Live Café, when KFC’s Saucy made its debut, when Pizza Hut introduced “Hut ‘N Go,” and when Perkins introduced its Griddle & Go model. This hypothetical conversation is even more likely to happen if these spinoff concepts continue to grow and thrive.
Merch becomes a bigger priority
In 2024, it seemed as though brand merch became just as important as the brand menu. KFC, Shake Shack, Portillo’s, Wendy’s, Chick-fil-A, White Castle, Chipotle, and Chili’s all stepped up their merch game, including with collaborations, in H2. Not to be left behind, Noodles & Company launched its first merch store in November. Pizza Hut took a slightly different approach, introducing a new Pizza Wine in partnership with Kansas-based Irvine’s Just Beyond Paradise Winery.
Merch wasn’t the only marketing priority for brands in 2024. Applebee’s teamed up with the NFL, while Wingstop did the same with the NBA. McDonald’s tapped into nostalgia with a wildly popular Collector’s Cup Meal, while Wendy’s found success with its SpongeBob SquarePants collaboration, and Starbucks did the same with its Wicked beverages.
The value proposition evolves
The industry continued to promote value offerings throughout the second half of the year, though many of those offerings evolved as consumers remained on the sidelines. Applebee’s, for example, went from promoting 50-cent mozzarella sticks to a $9.99 Really Big Meal Deal. Olive Garden brought back its Never-Ending Pasta Bowl, while Chili’s expanded its 3 for Me Deal to include 11 lunch combos.
McDonald’s found traffic traction from its $5 Meal Deal and extended the offer through the end of the year before announcing it will also be part of its new McValue Menu launching in January. Additional value campaigns in H2 included Del Taco’s 2 Under $2 Menu and Denny’s $2, $4, $6, $8, $10 value menu, while Jimmy John’s, Hardee’s, Potbelly, KFC, Subway, Carl’s Jr., IHOP, Sonic, Noodles & Company, and Taco John’s also added or expanded their value offerings.
New prototypes
Many brands experimented with new prototypes this year as real estate and construction costs remain high, and as digital sales have remained a significant part of the mix. In August, Chick-fil-A opened a massive drive-thru prototype outside of Atlanta, featuring four drive-thru lanes – two for traditional drive-thru customers and two for mobile-order-ahead customers – all underneath an elevated kitchen.
Meanwhile, Pizza Hut unveiled its first drive-thru menu to support its new omnichannel-focused restaurant with self-service kiosks, pickup cabinets, a guest-facing pizza station, and more. Its sister brand KFC began testing a new prototype with kiosks, upgraded kitchen technology, and an improved drive-thru experience.
Walk-On’s is developing a smaller prototype, as are Applebee’s, Taco Cabana, Portillo’s, and El Pollo Loco. Meanwhile, Chipotle announced it is accelerating its Chipotlane model because the mobile-order-ahead business has proven to be remarkably successful for the brand.
Anticipated comebacks
Nostalgia was certainly a major theme this year and that extended beyond successful marketing (and merch) campaigns and into announcements about brands from days’ past making a comeback. In July, Steak and Ale announced it is planning to return with the help of Bennigan’s parent company Legendary Restaurant Brands, while The Ground Round announced it is plotting a comeback in January. Chi-Chi’s also announced its anticipated return in 2025, 20 years after closing its last domestic restaurant.
Let’s hope these comebacks are a metaphor for the industry at large and that 2025 is full of many, many more positive headlines.
Contact Alicia Kelso at [email protected]
