Chain restaurants are a cornerstone of popular food culture, bringing customers consistent,
beloved meals on the road, late at night, and whenever a craving hits.
The restaurant industry can be cutthroat, however, even for chains that enjoy broad-based
success.
Here are 10 fast food chains struggling to stay in business.
Pizza Hut
The underdog chain was recently labelled one of the worst pizza chains in America, and
they have the numbers to back it up.
Yum Brands, which also owns fried chicken staple KFC and Mexican standby Taco Bell,
has found that the pizza chain struggles to distinguish itself from competitors and attract
a new crop of customers.
Yum Brands invested $130 million dollars in 2017 in an attempt to revitalize the stagnating
chain by upgrading equipment, improving technology, and boosting advertising.
The Hut has also added more inexpensive deals, such as large two-topping pizzas for $7.99
and $5 dollar menu deals.
It’s also spending more of its budget on marketing.
Pizza Hut has put significant effort into improving online ordering, as they recognize
the importance of online ordering in an increasingly delivery and takeout-based food landscape.
One of the chain’s major issues is that many customers don’t associate Pizza Hut
with delivery.
Pizza Hut aims to put delivery and mobile-ordering options front and center through delivery-focused
ads and by remodelling existing stores.
Burger King
Burger King’s parent company, Restaurant Brands International, announced plans in 2018
to modernize Burger King locations through implementation of a plan it’s calling “Burger
King of Tomorrow.”
The updated restaurants would include self-ordering kiosks and a generally sleeker design.
In an attempt to attract more customers, the chain has put out gimmick menu items and weighed
in on hot-button political issues.
In a 2018 ad campaign, the burger giant drew attention to the pink tax on women’s products
with a pink-packaged version of their chicken fries (complete with eyelashes) labelled ‘chick
fries,’ which would retail for $1.40 more than the regular version.
In reality, ‘chick fries’ were a limited-time publicity stunt meant to illustrate the chain’s
stance on the pink tax, and to demonstrate its real-life impact.
Similarly, the chain’s Whopper Neutrality ad was meant to parody and illustrate the
projected effects of repealing net neutrality, but with burgers.
Though these campaigns were intended to target an increasingly socially aware millennial
audience, they came off as empty marketing ploys to many.
They were also largely unsuccessful at increasing traffic.
Hometown Buffet
Ovation Brands, the owner of buffet giants Hometown Buffet and Old Country Buffet (along
with Ryan’s and Fire Mountain) has reportedly declared bankruptcy three times in the last
ten years.
In 2016, bankruptcy led to the abrupt closing of more than half of the company’s restaurants.
Ovation Brands also encountered difficulty in 2015, when they were forced to compensate
a Nebraska man $11 million after food from Old Country Buffet gave him salmonella poisoning.
Buffet-style restaurants have been struggling in general as of late, thanks to trends toward
healthier eating and smaller portions.
And highly publicized food safety issues in buffets have gained traction and continue
to dissuade the average consumer from choosing a buffet for their meals.
Food Safety News reported that even if buffets follow all food safety regulations serving
utensils present a large safety issue—when buffet patrons use the same tongs and forks
to serve up their food as other patrons, cold and flu germs can spread quickly.
Regulations require serving utensils be swapped out every four hours, but that still leaves
plenty of time for bacteria to accumulate.
Hooters
Though Hooters has a unique business model based on a combination of bar food and sexualized
servers, it suffers from a lot of the same hurdles as other restaurants on this list—the
general decline and increased competition in the sit-down casual dining market.
The chain closed a significant seven percent of their locations in the years between 2012
and 2016, and sales have continued to stagnate.
The company has also tried going in another direction with similarly named Hoots, a new
quick-service restaurant with a pared-down menu of only Hooters’ takeout bestsellers.
Hoots employees are clad in v-necks and polos paired with khakis, a far cry from the skimpy
attire expected from Hooters servers.
It’s also a part of an effort to appeal more to women and families.
The provocatively dressed ‘Hooters Girl’ may soon become an artifact of the bygone
era of sit-down casual dining, as the company moves toward a fast-casual business model.
Qdoba
Qdoba continues to lag behind Chipotle in the fast-casual Mexican food scene.
Owner Jack in the Box sold the chain for $305 million dollars in early 2018 due to slowing
sales.
The sale was in keeping with a string of similar burger chains selling their fast-casual chain
acquisitions, after Wendy’s sold Baja Fresh in 2006 and McDonald’s sold Chipotle.
Jack in the Box acquired Qdoba in 2003 and went on to grow the small Mexican chain to
a major national brand, but it began to lag in 2017.
Qdoba’s downturn was reportedly blamed to some extent on a 50% jump in avocado prices,
which squeezed the company’s margins.
Apollo Global Management now owns the Mexican chain, but it continues to suffer from a long
sales slump.
It also struggles with competition from similar fast-casual Mexican chains like Chipotle and
Taco Bell, as well as higher labor expenses.
Papa John’s
The pizza delivery chain Papa John’s has been lagging behind industry leader Domino’s
ever since it became embroiled in the controversy surrounding past CEO John Schnatter.
In 2018, evidence surfaced that Schnatter had used a racial slur in a conference call.
Since then, Schnatter has stepped down as CEO of the company, but Papa John’s remains
plagued by bad press after reports of a chronically toxic company culture emerged, including allegations
of frequent sexual harassment.
According to Business Insider, the company’s North American same-store sales declined by
almost 10% in the third quarter of 2018.
The pizza giant has also closed a number of locations based on this decline in same-store
sales as a result of the highly publicized controversy.
Steve Ritchie, the CEO that replaced Schnatter, is attempting to pull the company out of its
slump through the “Voices of Papa John’s” campaign, which aims to take the chain’s
marketing in a more modern and inclusive marketing direction.
Even so, it has been difficult to shake the negative media attention that Schnatter attracted,
and the chain plans to close 85 restaurants in the next year.
Subway
Fast sandwich chain Subway enjoyed broad success in the early 2000’s, as its simple sandwiches
were seen as a healthier alternative to fast food burgers.
The iconic sandwich chain’s success was buoyed by its $5 footlong promotion, which
began in 2008 as a response to the Great Recession.
This promotion proved very successful, attracting hordes of customers and leading competitors
to adopt similar deals.
It also reportedly started a trend of round price points for consumer goods ($5.00 rather
than $4.99, for example).
The $5 footlong fell by the wayside with the recession, however, and in 2014 the price
of a Subway footlong was increased to $6.
By 2017, the price was raised again to $7, a 40% increase from the original $5 deal.
Subway has also suffered from mounting competition from other health-focused chains as of late.
Consumers now gravitate toward trendier health food, and the simplicity that originally made
Subway great has become a detriment.
In an attempt to attract and retain business, the sandwich giant is implementing wi-fi,
self-service kiosks and more comfortable seating.
They also brought back their $5 footlong deal in January 2018 with a $4.99 footlong menu
of five subs at participating locations.
However, these efforts haven’t prevented ongoing store closures—500 Subways are projected
to close in the next year.
IHOP
IHOP (or the International House of Pancakes), sister brand to Applebee’s, is another victim
of consumers’ shifting preferences toward healthier food and takeout.
The company’s 2018 publicity stunt, in which it temporarily changed its name from IHOP
to IHOb to advertise its ten new burger offerings, did little to get people eating at the chain
again, though it did generate lots of media attention.
The shocking name change garnered national media attention and a flood of IHOb-inspired
memes.
The stunt was intended to get customers excited about the pancake chain’s new line of Ultimate
Steakburgers, part of a broader attempt to attract business outside breakfast.
This proved to be a confusing move—customers weren’t sure whether the chain would continue
serving the pancakes it was known for.
According to Business Insider, traffic at the pancake chain has been going down for
10 consecutive quarters, and it plans to close 30-40 locations in the upcoming year.
Applebee’s
Millennials are undeniably changing the food industry, and that’s bad news for casual
dining chains like Applebee’s.
The casual dining staple had its heyday in the 1990s, and early 2000s, as it opened an
impressive 1000 locations by 1998 (an impressive feat considering they only had 250 locations
in 1992) and expanding to international markets.
However, their format is losing ground with younger customers, leading to sweeping closings.
According to Business Insider, yearly closings of Applebee’s locations have been rising
since 2016, and sales continue to decline at the remaining locations.
In an attempt to remedy the situation and attract more business, the chain has introduced
online ordering with their new mobile app.
They also plan to offer wi-fi and tablets on the tables in their restaurants.
These repeated attempts to capture the customer base born between 1980 and 2005 have reportedly
alienated some older customers.
According to Restaurant Business, the chain is still doing well in terms of takeout orders
and bar service, but 189 locations are still projected to close in the coming year.
Noodles and Co.
Noodles and Company’s lagging numbers are likely due in part to the low-carb eating
trend sweeping North America.
The pasta giant attempted to respond to changing millennial eating habits by offering a shrimp
scampi dish with zucchini noodles in 2018.
This new addition was a direct response to the trendiness of ‘zoodles’ on social
media, ushered in by food bloggers and buzzed-about consumer products like the Spiralizer which
fueled the low-carb craze.
The company had more difficulties, however, after a 2018 data breach cost them $11 million
dollars and forced them to close 10% of their total locations.
Malware led to these customers’ credit card information being compromised.
An Oregon credit union sued the noodle chain over the data breach, in a suit that sought
class action status for all US financial institutions whose customers made purchases at Noodles
and Company locations.
The company was ultimately forced to pay up, putting a damper on their already stagnating
profits.
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