The
last two years have been a reality check for big multi-unit casual and
fast-food brands. Rising costs, changing customer expectations, aggressive
fast-casual competitors and franchisee fragility have combined to shrink
footprints that once felt invincible. Below I profile six recognizable chains
that have fewer open restaurants today than they did two years ago,
explain three concrete failure modes for each (menu/price, brand messaging,
competition/operations), and finish with four pragmatic success tips from the Grocerant Guru®.
1) Subway — continued footprint contraction
Subway
has been closing hundreds of U.S. locations annually; its domestic store count
dropped below 20,000 as closures outpaced openings.
Three
trouble examples
·
Menu / price problems:
Too many SKUs and inconsistent localized pricing mean promotions don’t drive
the volume needed to cover higher labor/food costs.
·
Brand messaging problems:
The brand’s identity has become muddled: is Subway fast, fresh, value, or
premium? Mixed signals weaken loyalty.
·
Competition / operations problems:
Aggressive fast-casual sandwich chains (Jersey Mike’s, Jimmy John’s) and
franchisee fatigue (older locations, higher capex to remodel) have made many
suburban stores uneconomical.
2) Red Lobster — restructuring and a smaller chain after
bankruptcy actions
Red
Lobster went through bankruptcy restructuring and shut many locations before
emerging — the system is materially smaller than it was two years ago.
Three
trouble examples
·
Menu / price problems:
High-cost core ingredient (seafood) plus promotional pricing (e.g., “endless”
promotions) crushed margins.
·
Brand messaging problems:
The chain oscillated between value promotions and “premium seafood”
positioning, confusing guests about what to expect.
·
Competition / operations problems:
Rising rent, labor and supply costs plus some legacy large dining rooms make
underperforming units a target for closure.
3) Pizza Hut — franchisee bankruptcy and localized mass
closures
Pizza
Hut saw dozens of abrupt closures after major franchisee bankruptcies and sales
of former franchise portfolios — several markets lost many locations in the
past 18 months.
Three
trouble examples
·
Menu / price problems:
Frequent menu experimentation without a clear value anchor can alienate
price-sensitive pizza buyers.
·
Brand messaging problems:
Pizza Hut’s marketing has drifted between delivery-centered convenience,
dine-in legacy, and niche product pushes (Detroit style, melts), diluting
clarity.
·
Competition / operations problems:
Franchisee disputes, uneven digital experience and more nimble rivals (Domino’s
digital engine, Little Caesars value plays) left some franchise operators
unable to compete.
4) Steak ’n Shake — long, steady unit contraction and
operational pivoting
Steak
’n Shake has been closing or converting many units and shifting formats; the
brand has several hundred fewer restaurants than in previous years.
Three
trouble examples
·
Menu / price problems:
An identity stuck between diner and fast-casual made it hard to set price/value
expectations — margins suffered.
·
Brand messaging problems:
Mixed signals about service model (full table service vs. kiosk/drive-thru
conversion) confused repeat guests.
·
Competition / operations problems:
Slow franchise conversion, operating cost pressures, and underinvestment in
remodeled prototypes led to store closures.
5) IHOP — targeted closures and portfolio pruning
IHOP
has also reduced locations in recent years as the brand rationalized
underperforming units and pursued different development formats.
Three
trouble examples
·
Menu / price problems:
Pressure to deliver breakfast value while food/labor costs rise makes margin
management difficult for legacy breakfast operators.
·
Brand messaging problems:
Efforts to be “breakfast champion” while also competing off-peak (lunch/dinner)
can muddy core messaging.
·
Competition / operations problems:
Fast-casual breakfast concepts and delivery aggregators siphon off core
occasions; some older IHOPs require capex to modernize.
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6) Applebee’s (Dine Brands) — net unit losses during
portfolio optimization
Dine
Brands (Applebee’s and IHOP) has reported net fewer Applebee’s units as it
rationalizes underperforming stores — dozens of Applebee’s closed in the last
two years as part of development strategy.
Three
trouble examples
·
Menu / price problems:
Applebee’s faces a squeeze between value diners (want cheap bundles) and rising
food/labor costs; promotions often erode check averages.
·
Brand messaging problems:
The legacy “neighborhood grill” feel competes with need to look modern —
inconsistent remodel rollout undermines a coherent national image.
·
Competition / operations problems:
Mature markets, lease expirations and franchisee decisions to exit poor
locations have increased net closures; Dine Brands is experimenting with
co-located IHOP/Applebee’s models to cut costs.
Four Grocerant Guru success tips — how to stop (or slow)
the bleed
1. Pick
one positioning and commit — don’t chase every occasion. Choose
the primary occasion that drives traffic (e.g., quick, affordable weekday
dinner vs. weekend dine-in) and align menu, pricing and marketing to that
single story. Mixed messages confuse guests and franchisees.
2. Simplify
the menu; increase velocity SKUs — fewer, higher-margin, easy-execute
items reduce labor burden, speed service and improve consistency. Use a tight
core + rotating limited items to keep interest without operational complexity.
3. Fix
unit economics (lease & labor focus) before growth
— rigorously evaluate each store’s true contribution margin (rent, local labor,
marketing share). Close or remodel low-return units; funnel capital to
prototypes that prove ROI quickly.
4. Operationally
modernize the franchise system — invest in digital ordering and
fulfillment standards, a clear franchisee support playbook, and consistent
remodel plan. Where possible, experiment with dual-brand or
shared-back-of-house concepts to lower capex and operating cost per square
foot.
Final note from the Grocerant Guru®
Footprint
contraction is messy and emotional — teams, suppliers and neighborhoods feel
it. But contraction can also be strategic: the brands that stabilize fastest
are those that stop treating unit count like vanity and start treating unit
economics and brand clarity like survival metrics. If you want, I’ll
convert this into a 700-word magazine feature with pull quotes and a data
sidebar showing year-over-year unit counts (I can source the latest counts and
add a small chart). Which format do you prefer?
Success Leaves Clues—Are You Ready to Find Yours?
One
key insight that continues to drive success is this: "The consumer is
dynamic, not static." This principle is the foundation of our work at Foodservice
Solutions®, where Steven Johnson, the Grocerant Guru®, has been
helping brands stay relevant in an ever-evolving market.
Want
to strengthen your brand’s connection with today’s consumers? Let’s talk.
Call 253-759-7869 for more information.
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your food marketing keeping up with tomorrow’s trends—or stuck in yesterday’s
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here to help.
At
Foodservice Solutions®, we specialize in consumer-driven retail food
strategies that enhance convenience, differentiation, and
individualization—key factors in driving growth.
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