The casual restaurant sector faced a distressed year in 2024 with several chains closing underperforming locations and sometimes filing for bankruptcy and shutting down units.
The struggling restaurant chains often claimed high interest rates, rising inflation, lingering effects from the Covid-19 pandemic, and a tightening of discretionary spending by consumers for causing the distress.
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These factors led to a combination of declining revenue and rising debts that trapped certain restaurant chains forcing asset sales, out-of-court restructurings, and Chapter 11 reorganizations.
Related: Bankrupt restaurant chain sells or closes its remaining locations
TGI Fridays filed for Chapter 11 bankruptcy reorganization on Nov. 2 to reorganize its business and sell its 39 company-owned locations.
The restaurant chain on Jan. 2 won approval to sell nine of its most successful restaurant locations to franchisee Mera Corp. for $34.5 million, which includes cure costs and assumed liabilities.
The company also sought bankruptcy court approval to sell 18 of its 30 remaining locations to two buyers, with Yadav Enterprises and Turn Table Acquisitions purchasing 15 for a $3 million credit bid and Sugarloaf Concessions LLC buying three for $100,000 and payment of all lease and sales tax associated cure amounts.
The debtor said it would reject leases and shut down the remaining 12 company-owned locations that have not received any bids or interest from potential buyers.
Popular Italian restaurant chain Buca di Beppo filed for Chapter 11 protection on Aug. 4 to reorganize its business with the support of its lenders after closing 13 underperforming locations in the week before it filed for bankruptcy.
Buca di Beppo had 44 locations in 14 states after the closings and sold its remaining assets to its prepetition lender Main Street Capital Corp. for a $27 million credit bid in a bankruptcy auction.
IHOP, Applebees have declining same-store sales
Dine Brands, which operates the IHOP and Applebee’s casual restaurant chains, reported its restaurants had several consecutive quarters of declining same-store sales, which led the company on Jan. 31 to lay off 9% of its workforce at its Pasadena, Calif., headquarters, Nation’s Restaurant News reported.
The restaurant operator in May 2024 said that it would close about 35 Applebees locations.
Denny plans to close 70 to 90 locations in 2025. (Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images)
Jeff Greenberg/Getty Images
Denny’s closing dozens of locations
And now Denny’s Corp. has revealed plans to close many more lower-volume restaurant locations than originally planned through the end of 2025.
Related: Another major pizza chain franchisee files Chapter 11 bankruptcy
The popular breakfast restaurant chain said during its fourth quarter 2024 earnings call that it planned to close 70 to 90 lower-volume restaurant locations in 2025, after shuttering 88 locations in 2024.
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The 2024 closings were part of the restaurant chain’s planned acceleration of lower-volume restaurant closures. The chain closed 30 locations in the fourth quarter of 2024 alone.
During its third-quarter earnings call in October 2024, Denny’s said it planned to close a total of 150 locations, with 50 in 2024 and the remaining 100 in 2025.
The updated closing target would result in up to 178 closings in 2024 and 2025, or about 28 more locations than originally planned.
The company also said that it plans to open 25-40 new restaurants in 2025, with about half the new locations under the Denny’s brand and the other half under its affiliate restaurant brand Keke’s.
Denny’s Corp. consisted of 1,568 restaurants, with 75 company-operated and 1,493 franchised locations at the closing of the fourth quarter on Dec. 25, 2024.
The Denny’s brand consisted of 1,499 restaurants, with 61 company-owned and 1,438 franchised units, according to a quarterly results statement. The Keke’s brand consisted of 69, with 14 company-owned and 55 franchised locations.
Denny’s reported $6.8 million income on $114.7 million in revenue in the fourth quarter of 2024, a slight 0.6% decline year-over-year from $115.4 million in 2023.
Domestic same-restaurant sales for Denny’s increased by 1.1%, while Keke’s rose 3%.
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