Hundreds of Texans employed with soft-serve ice-cream and fast-food chain Dairy Queen are about to get laid off. We’ll be seeing dozens of Dairy Queen restaurants closing across the state in the days to come as a Texas-based franchisee operating Dairy Queen locations enters bankruptcy. The franchisee, Vasari LLC, has just filed for Chapter 11 bankruptcy, with plans to downsize its business.
List of Dairy Queen Restaurants Closing After Franchisee’s Bankruptcy
Vasari LLC operates a little over 70 Dairy Queen restaurants, mostly within Texas, but a few in New Mexico and Oklahoma, as well. The franchisee plans to keep only 45 of these stores open following its bankruptcy. The remaining locations, as identified by the company, are underperforming and will be closed through its bankruptcy proceedings.
Vasari has issued a list of 29 Dairy Queen restaurants closing, of which two are in New Mexico, three are in Oklahoma, and the remaining majority are in Texas. Some of these locations are reportedly already liquidated.
Vasari LLC has filed for Chapter 11 bankruptcy protection, citing economic headwinds in Texas as the reason. The Texas-based company says that low oil prices have contributed to the decline in its business.
Texas’ economy, which is heavily reliant on pumping, refining, and selling oil, has been suffering as oil prices hit multi-year lows in the past couple years. Many Texans employed in the oil sector faced a decline in their working hours, furloughs or, worse, job cuts. Simply put, many got stripped of the disposable income, which was previously being spent on leisurely activities and eating out. The hospitality sector, of which the restaurant industry is a part, suffered greatly as a result.
Dairy Queen Restaurants Closing Due to Sales Lost In Hurricane Harvey
Adding to Vasari’s business troubles is the devastating Hurricane Harvey, which put a further dent in Texas’ economy. Harvey, which struck the Texas coast by late August, not only forced the coastal oil refineries to shut down, but also caused extended business closures away from the coast. In fact, the industry which suffered the most job losses during this period turned out to be the restaurant-cum-hospitality industry.
The industry lost a whopping 105,000 jobs across America in September, owing to the two hurricanes, Harvey and Irma. This turned out to be the highest number of job losses faced by the industry on record.
It is estimated that restaurants within the Houston metro area–which was the worst hit by Harvey–faced a 50% decline in sales in the week the hurricane hit.
The statistics do corroborate Vasari’s justification, but only show one side of the picture. The other side is far uglier. The bitter reality is that America’s restaurant industry has been suffering for a while now. This year alone, hundreds of restaurants have closed and thousands have lost their jobs in the process.
The slowdown is owed to the changing consumer patterns. Americans, particularly the younger generation of Millennials, are beginning to prefer eating at home. Shrinking disposable incomes and a preference for healthy foods have jointly played the role in shaping this trend.
Dairy Queen’s ice-cream-focused menu is failing to generate enough sales to cover for overheads incurred in running a store. This is why Vasari is forced to consider closing the dozens of underperforming locations.
Regardless, with so many Dairy Queen restaurants closing, mostly within Texas, the state’s hospitality industry is set to add hundreds more to the state’s Harvey-led job losses.
“Dozens of Dairy Queens to close after franchisee files for bankruptcy,” KXAN, October 31, 2017.
“The Restaurant Industry Lost 105,000 Jobs in September,” Eater, October 19, 2017.