The restaurant industry faced significant hurdles throughout 2024, leading to a wave of closures and bankruptcies that shook the landscape of casual dining and fast food chains. Rising inflation and a tight economic environment compelled consumers to be more frugal with their dining choices. As many diners curtailed their restaurant visits, operating costs continued to escalate, aggravating the already precarious position of many chains. The latest data from Black Box Intelligence indicates a consistent decline in restaurant traffic for the first ten months of the year, reflecting a broader trend of declining sales and mounting bankruptcies.
In total, twenty-six restaurant companies filed for Chapter 11 bankruptcy protection in 2024—a staggering figure that is nearly three times the filings recorded during the pandemic’s peak in 2020. These closures are not merely numbers on a page; they signify the struggles of beloved establishments that have become cornerstones of the American dining experience. The pressures of fast-casual dining competition, notably from popular names such as Chipotle and Sweetgreen, have relentlessly chipped away at the profitability of traditional casual dining outlets.
Several well-known chains have been directly affected by these economic pressures, announcing widespread closures to streamline operations. In late October, Wendy’s disclosed plans to shut down 140 underperforming locations by year-end, building upon the 80 closures already undertaken in the first three quarters. Wendy’s executives noted that many restaurants in their portfolio generated an annual volume of only about $1 million. Despite these closures, the CEO remains optimistic about stabilizing the overall restaurant count thanks to new openings.
Applebee’s has not fared much better. Dine Brands, the parent company, indicated a plan to close 25 to 35 locations due to sustained sales declines. Applebee’s reported six consecutive quarters of decreased same-store sales—a troubling indicator of customer loyalty eroding over time. Dine Brands has pursued similar strategies involving closures for several years, highlighting a trend affecting both Applebee’s and its sister chain, IHOP.
Meanwhile, Denny’s announced intentions to close around 150 locations by the end of 2025, aiming to enhance its overall performance and annual unit volumes. The company is confident this pruning will return them to a more robust financial footing after a steady decline in revenue. Executives presented the closures as a necessary step toward revitalizing the remaining locations—a trend indicative of the broader situation across the industry.
TGI Fridays also made headlines by filing for bankruptcy amidst shuttering 86 restaurants, significantly reducing its operational footprint. After a disappointing performance, TGI Fridays must now navigate a complex bankruptcy process with a court overseeing its future.
Attempts at Recovery: Adjusting Strategy
In the wake of these challenging circumstances, many companies are re-evaluating their business models in hopes of recovery. Notably, Red Lobster faced a disruptive year, shutting down over 120 locations before entering Chapter 11 bankruptcy protection but subsequently emerged under new leadership. This transition might signal a fresh start as they endeavor to restore brand integrity and attract diners once more.
Fast-casual player Noodles & Company undertook a strategic review of its restaurant footprint, resulting in the closure of roughly 20 locations as an adjustment to its operations. Not only does the company seek to streamline its physical presence, but it is also committed to overhauling its menu by eliminating poorly performing items and introducing new, appealing options. However, forecasts suggest that significant recovery will require time and strong marketing efforts.
Bloomin’ Brands—the umbrella company for Outback Steakhouse, Carrabba’s Italian Grill, and Bonefish Grill—also felt the crunch, shuttering 41 underperforming locations. This shift was particularly focused on older establishments with outdated leases and insufficient sales performance. This trend underscores a broader challenge within the casual-dining sector as guests increasingly seek dining options that deliver both convenience and quality.
As we move into 2025, the restaurant industry remains at a crossroads. With major chains making significant cuts to their physical presence and operational strategies, the ongoing impacts of changing consumer behavior and economic pressures will likely continue to reshape the landscape of American dining. The challenge now is not only to survive the ongoing difficulties but also to adapt to an evolving marketplace that increasingly prioritizes value, quality, and convenience. Restaurateurs must innovate and respond to consumer preferences, or they risk becoming just another statistic in an already turbulent industry.