It’s been a strange year for the restaurant business. As many as a quarter of new jobs were created in the restaurant sector as recently as June. In some cities, the share of job creation rises to about a third of all jobs generated. And yet, hundreds of restaurants closed in 2017 so far.
Applebee’s Restaurants LLC., International House of Pancakes (IHOP), Noodles & Co (NASDAQ:NDLS), Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Joe’s Crab Shack, Pollo Tropical, Papa Murphy’s Holdings Inc (NASDAQ:FRSH), and many others have seen dozens—sometimes hundreds—of their locations shutter in 2017. And with those hundreds of restaurants closed in 2017, thousands of jobs have been lost in more casual dine-in locations, while full-service restaurants have been filling the void.
While the quality of these jobs is uncertain, what is certain is that across the U.S., restaurant shutdowns in 2017 have cost thousands of people their jobs and damaged communities that rely on them to help provide opportunities to residents.
DineEquity Closed 160 Applebee’s & IHOP Restaurants in 2017
“We are long overdue in rationalizing the size of our system and closing poorly performing restaurants,” DineEquity CEO Richard Dahl said in a call with investors.
DineEquity reported that its net income in the second quarter was $20.9 million, down from $26.4 million in the same period the year before. Applebee’s same-store sales decreased seven percent in the quarter.
“Over the past few years, the brand’s set out to reposition or reinvent Applebee’s as a modern bar and grill in overt pursuit of a more youthful and affluent demographic with a more independent or even sophisticated dining mindset, including a clear pendulum swing towards millennials,” John Cywinski, Applebee’s brand president, said in a statement. “In my perspective, this pursuit led to decisions that created confusion among core guests, as Applebee’s intentionally drifted from its what I’ll call its Middle America roots and its abundant value position,” he continued. “While we certainly hope to extend our reach, we can’t alienate Boomers or Gen-Xers in the process.”
Applebee’s and IHOP find themselves struggling against the same tide that many casual dine-in restaurants have faced, with consumers either looking towards more formal dine-in services or leaning towards fast food, and in both cases emphasizing health.
Applebee’s tried to refresh its brand by targeting younger eaters, but its attempt to attract Millennials ended in failure and contributed to the downsizing the company is going through in 2017.
Noodles & Company Shuts Down 55 Underperforming Restaurants
Noodles & Company adds 55 more restaurants to the list of closed locations. The company has long-suffered from year-over-year declines. The 55 closures targeted “underperforming” locations and accounts for more than 10% of its total restaurants.
The closure of the company-owned restaurants is intended “to eliminate the negative cash flow of these restaurants and improve overall performance,” Noodles & Co said in an announcement in February.
In late 2015, the company shuttered 15 of its sites, a far cry from the dozens closed in 2017.
“The company’s financial performance has been adversely impacted by these restaurants, many of which were opened in the last two to three years in newer markets where brand awareness of the company’s restaurants is not as strong as in other markets,” the announcement read. “These restaurants have significantly underperformed the company’s restaurant averages.”
Bloomin’ Brands Closed 43 Outback Steakhouse, Carrabba’s Italian Grill & Bonefish Grill Restaurants in 2017
In 2017, the number of Outback Steakhouses, Bonefish Grills, and Carrabba’s Italian Grills that closed reached 43 cumulatively across the nation, adding to the growing number of restaurants closed in 2017.
The restaurant chains have fallen on hard times in recent years. Same-store sales fell across the board in the fourth quarter, while in the more recent second quarter of 2017, all the new Outback Steakhouse restaurant openings were international. Revenue also fell in Q2 2017.
The three restaurants are Bloomin’ Brands Inc (NASDAQ:BLMN) subsidiaries. Bloomin’ Brands has had a muted year on the stock market, gaining less than one percent year-to-date.
The company operates more than 950 Outback, 240 Carrabba’s Italian Grills, and 210 Bonefish Grill locations across the U.S.
Joe’s Crab Shack Closed Down 41 Restaurants After Filing Bankruptcy in June
Many Joe’s Crab Shacks closed across the country following Joe’s Crab Shack bankruptcy, and according to their employees, they were not even warned that their locations were going out of business.
Reports have come in of workers showing up to the restaurants only to find that they no longer had a job because their place of employment ceased to exist, putting further strain on the newly unemployed.
Reports say that at least 41 restaurants have been closed since the beginning of August. To make matters worse, the closings were likely in the works for months, meaning the employees were callously disregarded by the company, being left uninformed about the future of their jobs with the business.
Joe Crab’s Shack initially filed for bankruptcy in June.
Pollo Tropical Closed 36 Restaurants, Mainly in Texas
The amount of Pollo Tropical locations closed in the U.S. was ironically compounded upon by tropical storm-turned-hurricane, Hurricane Harvey, which the company says led to six closings and a total withdrawal from Texas.
“The decision to close these restaurants was due to ongoing uncertainty in South Texas, including the effects of Hurricane Harvey and limited awareness of the Pollo Tropical brand,” the company said in a statement.
“We will be slightly delaying the start of our planned marketing build as our markets recover from these storms,” Fiesta CEO Rich Stockinger said in a statement, “but expect to resume an impactful media plan before year-end.”
Fiesta Restaurant Group Inc (NASDAQ:FRGI) is the parent company of Pollo Tropical.
The restaurant chain was also further damaged when it shuttered 30 locations across Texas, Georgia, and Tennessee, another victim to the rising tide of consumers turning away from unhealthy fast-food.
Papa Murphy’s Closed 16 Eateries as a Cost-Cutting Effort
More Papa Murphy’s closed locations add to the number of restaurants closed in 2017, with 16 shuttering across the country by year’s end.
The Vancouver, Washington-based company was founded in 1981 and has more than 1,500 franchised and corporate-owned stores spanning 39 states, Canada, and the United Arab Emirates.
“As we work to prepare for the refranchising of a majority of our company-owned stores, we have assessed the on-going viability of certain locations and are taking action to optimize the near-term value of the portfolio to benefit both the company and the franchise-owners acquiring the markets,” said Jean Birch, board chair and interim chief executive, in a statement. “We have a clear opportunity to reduce short-term losses while giving new owners a more profitable portfolio of stores from the start.”
Other Popular Restaurants That Shutdown in 2017
Besides the above-listed restaurants closed in 2017, many more eateries have struggled this year with closures.
One of the most famous upscale restaurants in New York, a city full of them, is closing its doors and moving to a smaller location due to rent prices. We will likely see Le Cirque closed on January 5, when the restaurant has to leave the building.
BurgerFi closed in Ann Arbor at the University Towers building abruptly, leaving only a sign and an apology.
Bravo Brio Restaurant Group Inc. (NASDAQ:BBRG) closed six of its “underperfoming” locations. Bravo Brio subsidiaries were shuttered across the U.S. as the company has had a dismal year on the stock market.
In Arizona, Phoenix restaurants closed have now added two prominent eateries to its number – Z’Tejas and Alice Cooper’stown.
A final bit of bright light for restaurant employees in an otherwise uncertain situation; Eatsa closed several locations in major U.S. cities, with only two surviving the cuts. While restaurant closures are not usually something that food service employees cheer, Eatsa made a name for itself as an automated eatery. The failure of Eatsa may save other restaurants from upping their automation in the near future, even if some believe that computers taking over the service industry, especially restaurants, may be inevitable. Between automation and the restaurants closed in 2017, the outlook may prove grim for certain sectors of the food service industry.
“DineEquity Orders Up New CEO, Fewer Domestic Applebee’s Outlets,” The Wall Street Journal, August 10, 2017.
“Noodles & Company to close 55 restaurants,” Denver Business Journal, February 9, 2017.
“43 Outback, Carrabba’s, Bonefish Grill locations closing,” AL.com, February 20, 2017.
“Bloomin’ Brands Announces 2017 Q2 Diluted EPS of $0.35 and Adjusted Diluted EPS of $0.28; Reaffirms Full Year 2017 Adjusted Diluted EPS and U.S. Comparable Sales; and Repurchases $233 Million of Common Stock Year-to-Date,” Bloomin’ Brand Inc, July 26, 2017.
“Joe’s Crab Shack closes a bunch of restaurants, doesn’t warn employees,” Fox News, August 22, 2017.