The pandemic hit hard for a lot of people, and that includes the restaurant business. A lot of restaurants were treading dangerous waters even before 2020 happened, and now, because of those events, many of them are met with the difficult choice of closing their doors forever. Here are 10 Restaurant Chains That May Sadly Disappear in 2021.
10. California Pizza Kitchen
Even though some pizza chains with delivery-based models saw sales going through the roof in 2020, the same can’t be said for those who rely more on a sit-down model. One of these restaurants finally had to throw in the towel by declaring bankruptcy, and that’s California Pizza Kitchen. California Pizza Kitchen is an American style casual dining restaurant, and it specializes in California-style pizza. It was founded in 1985 by Rick Rosenfield and Larry Flax and once boasted over 250 locations in 11 countries. Since February, the casual dining pizza chain has been doing everything it can to stay afloat. When it had to close its dining rooms due to health restrictions, this pizza joint decided to start selling meal kits through its “CPK Market” service. For a while, it seemed to be doing the job. It definitely helped out some of their restaurants, but it wasn’t enough: 46 California Pizza Kitchen restaurants that weren’t able to provide this service had to close temporarily, and 4 ended up permanently closing. While Jim Hyatt, the CEO of California Pizza Kitchen, believes that they’ll be able to make a Phoenix-like comeback and emerge stronger because of their struggles. However, with $400 million in debt and months of unpaid rent at a majority of its locations, it looks like this chain might be on its last leg.
9. Ruby Tuesday
Ruby Tuesday was founded in 1972, and it’s famous for its all-American cuisine. While the chain was already struggling to bring in younger customers, it looks like 2020 has made everything just a bit worse. Since January 2020, the chain has quietly been closing locations all across the country, erasing them from its website like they never existed in the first place. While Ruby Tuesday claimed that these locations were only going to be closed temporarily, things have changed. In October, the company filed for bankruptcy, claiming that its locations that were once temporarily closed would now be closed permanently. There’s good news, though: Ruby Tuesday will continue to operate its remaining 236 locations while it restructures its debt, the company said. The privately held chain, based in Maryville, Tennessee, has struggled in recent years in part because many of its locations are inside shopping malls, and foot traffic has declined. 2020 was just the straw that broke the camel’s back. According to the CEO of Ruby Tuesday, it was the almost complete elimination of in-store dining, which historically has represented over 90% of the company’s total sales, that drove them to file for bankruptcy. While it’s sad that they have to close down locations, it looks like some new complications are coming because of it. Some Ruby Tuesday employees are accusing the chain of closing locations while giving them no (or extremely short) notice. One employee said that they showed up to work, only to be greeted by moving trucks. Another claims that their manager received directions from corporate not to tell employees until the last possible moment while closing another location. While this seems to be a widespread phenomenon, and despite being asked with multiple inquiries, the company has refused to comment on it.
Let’s be honest: being in a pandemic means people are getting up later and later. If you can work at home, why not start your workday at 10? Or noon? While everyone is using delivery apps for meals like lunch and dinner, they’re rarely using them to get breakfast. This is putting restaurants like IHOP at risk. The breakfast chain has been struggling to keep itself afloat during 2020, and it was forced to permanently close 35 of its locations earlier on. In October, the chain announced it would be closing an additional 100 restaurants across the United States. IHOP states the reason behind closing these locations is because they were underperforming but that they’re confident they’ll be able to replace them with better-performing restaurants in the future. A representative for Dine Brands also revealed in a statement that these closures would allow the chain to remain focused on continuing to close the gap on sales, as well as focus on key priorities including expanding off-premises, ensuring restaurant safety, and providing compelling value and innovation. Considering that many of their restaurants are still closed or operating on a delivery-only model, that’s an extremely bold claim. But, this company’s been in business for over 50 years, and they’re wildly beloved by many. Maybe they’ll be able to recover from this blow and reopen, just like they planned.
Applebee’s is a much-loved family restaurant. Everyone has good memories of visiting this chain for a good old fashioned dinner, which is why this announcement comes as a blow to many. Seeing how Dine Brands owns both IHOP and Applebee’s, it makes sense that Applebee’s would also be closing some of its locations. Unfortunately, Applebee’s announced that it would close 15 restaurants during the final quarter of 2020 after having closed 20 stores for good the previous few months. For those who keep themselves updated on all Applebee’s related news, this actually doesn’t come as much of a shock. The troubles this restaurant is facing goes back years; its situation has just been made worse due to the pandemic. In 2017, the chain closed nearly 100 stores permanently, and dozens more in the following year. This is because it reportedly has a hard time attracting a younger audience, and when it attempted to rebrand as a more upscale version of itself, it failed miserably, costing the company millions of dollars. To add insult to injury, the executives of the company seemed to think everything was going peachy. In an interview done over the summer of 2020, one of the CEOs assured the press that while some restaurants would close, the company was certain it would keep its head afloat. They couldn’t have been more wrong. We’ll just have to wait and see if Applebee’s closes down for good.
6. Steak N’ Shake
The future of this popular restaurant looks like it’s on shaky ground. Known for its “steakburgers” and milkshakes, Steak N’ Shake has been around for nearly a century. But it looks like 2021 might change that. This chain is another whose monetary issues began prior to the 2020 pandemic. Even before foot traffic stopped for good, Steak N’ Shake was closing down restaurants. By the end of 2018, it had permanently closed over 70 locations. According to statistics, the chain’s sales have dropped at least five percent each quarter since the middle of 2018. While they did try to make things better, namely by switching to a new franchising business model, as of May 2018, they had nearly $160 million in loans still outstanding. Sadly, things have been steadily getting worse over the years. In 2020, Biglari Holdings released its first-quarter report, which showed the fast-food chain’s revenue has drastically dropped since the prior year. The numbers from the report were sobering, with a loss of $59 million in sales compared to this time last year. Biglari links the staggering losses to the decrease in demand across the chain, forcing the company to make some hard choices. If you’re wondering exactly how desperate they’re getting, the CEO of Steak N’ Shake’s parent company has resorted to the idea of cutting out the signature cherries that have adorned the top of the chain’s milkshakes for eight decades. He believes it will save $1 million a year. While they’ve had to close down many of their locations, some are still offering take-out and drive-thru. If you’re a fan of Steak N’ Shake, we’d suggest you go out and grab some right now. It may not be around for much longer.
It looks like IHOP isn’t the only breakfast chain that’s been given the short end of the stick during the pandemic. Denny’s, a much-loved diner, also seems to be in some rough waters. In May 2020, it was announced that the company would be permanently closing down 15 locations in New York, laying off over 500 workers. There are many reasons for these closures, some of them unsurprising. When asked about it, a Denny’s representative said that it was due to the financial environment caused by the pandemic. And while Denny’s has been working with its franchise owners to assist in helping them through a crisis, the final decision to close is in the hands of each franchise business owner and their particular circumstances. According to one source, disputes over leasing agreements contributed to some of the closures. Denny’s has also had trouble fully staffing the late and overnight shifts. Around 70 percent of units have failed to return to all-hours dining since the pandemic began. Staff members may be concerned about how much money they will be able to make during off-hours, potentially making them wonder whether it’s worth their time. In addition, limited-reopening capacities have only dug profits deeper into the ground. These 15 closures are just the tip of the iceberg: earlier in May, Denny’s said that 312 of its locations had been temporarily closed due to the pandemic. That makes up for roughly 18% of all its locations. While many of their stores are closing, don’t worry. Considering that their profits were at an all-time high last year, Denny’s as a whole is here to stay.
4. Chuck E. Cheese’s
Filled with screaming children, a ball pit, and animatronic animals, Chuck E. Cheese is synonymous with childhood fun. Chuck E. Cheese got its start in 1977 when Atari co-founder Nolan Bushnell opened Chuck E. Cheese’s Pizza Time Theatre in San Jose, California. The restaurant featured a cast of animatronic characters led by Chuck E. Cheese, a plucky rat in a bowler hat that was later rebranded as a hip mouse. The chain promises that Chuck E. Cheese is the perfect place for a kid to be a kid. Well, it looks like we might lose that in the midst of our current situation. In June 2020, Chuck E. Cheese’s parent company (CEC Entertainment) filed for bankruptcy, becoming the largest restaurant company to do so in the midst of the pandemic. The day after it filed for bankruptcy, CEC Entertainment announced that it would be closing nearly three dozen locations! Yes you heard it right: all across America, the iconic Chuck E. Cheese is closing its doors, maybe for good. While Chuck E. Cheese was already struggling before the pandemic hit – it’s not as easy to entertain kids in the age of smartphones – the company said that its finances were really affected by the lack of foot traffic in their restaurants. This is sad news, but don’t worry: while some of its locations are closing, there are still roughly 450 that are operating on delivery and takeout models. It’s also started offering at-home birthday packages, so you can replicate the magic of Chuck E. Cheese from the comfort of your own home!
3. Golden Corral
The Golden Corral is one of the biggest names in all-you-can-eat dining, and it may be closing its doors for good. While some restaurants could use delivery and takeout to lessen the impact of the pandemic, it’s difficult to do that with a buffet style restaurant. The 1069 Restaurant Group, which is owned by husband and wife duo Eric and Diane Holm, operates 33 locations of the popular buffet chain through subsidiaries in Florida and Georgia. The company has reported a debt of $49.7 million in their court filings, a downfall attributed to restaurant closures and a drop in sales during the pandemic. Like many buffets, the Golden Corral closed down all of its locations in March, with only 6 having been reopened since. The 1069 Restaurant Group will use the bankruptcy filing to reconfigure their restaurants and hopefully find a solution for ongoing service restrictions. So far, the brand has experimented with no-touch buffets, where customers essentially use gloves or napkins when touching shared serving utensils. While some buffet restaurants have switched to cafeteria-style operations, the infrastructure of Golden Corral’s buildings doesn’t allow for this type of service. Hopefully, they’ll be able to figure something out because the life of this chain is hanging on by a thread.
Of all the restaurant chains that are closing outlets, maybe one of the most shocking is Subway. Maybe it’s the fact that they’ve been around for nearly five decades, or maybe it’s just because of how many darn locations they have (over 40,000!) But it looks like Subway isn’t immune to the dip in sales that have plagued every other eaterie. It’s not just the pandemic, though. The famous sandwich shop has been losing stores each year since 2017. In total, 13 percent of Subway restaurants in the United States have closed since 2015, including 2,000 in the past two years. Why is it doing so poorly? Well, they kind of did it to themselves. Their business model largely relied on opening as many restaurants as possible, which many people will tell you just isn’t a great way to run your business. It led to multiple Subway shops in the same vicinity, eating away at each other’s profits. While its descent is still slow, if something doesn’t change soon, we may have to go somewhere else for our sandwiches.
1. Red Lobster
People have been speculating that Red Lobster would close as far back as 2013, but the chain has so far managed to fight it off. But in 2020, nothing’s certain. In March, Red Lobster’s credit rating was downgraded to “poor quality and high credit risk.” This was in part due to the pandemic, where Red Lobster faced challenging operating trends, especially in customer traffic. A few months later, the chain hired an advisory firm to help out. Almost immediately, Red Lobster admitted that it would need to close some of its more than 700 restaurants, although it held out hope that mass shutdowns would not be needed. One looming problem for the famous seafood outlet is a $355 million loan that will come due in the summer of 2021. Repaying a debt that big will be extremely difficult, and Red Lobster’s CEO even admitted that the restaurant is going through the most challenging time in its 52-year history.