This year, many restaurant chains have faced significant financial challenges. Factors contributing to their struggles include rising food prices due to inflation, increased interest rates, and shifting consumer spending habits.
The economic impact has forced several restaurants to close locations and, in some cases, file for bankruptcy. One notable case is EYM Pizza, the operator of Pizza Hut franchises in Illinois, Indiana, Ohio, Texas, and Wisconsin. The company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of Texas on July 22. EYM Pizza also hired National Franchise Sales to help sell its 127 restaurants during the bankruptcy proceedings. The Irving, Texas-based franchisee had been sued by Yum Brands, the parent company of Pizza Hut, after it ceased paying royalties following the end of a forbearance period.
In another case, Mary’s Pizza Shack, a popular chain based in Sonoma, California, filed for Chapter 7 bankruptcy on September 10. This move is part of a restructuring plan that aims to convert the business from a single corporation into smaller family-owned units. The company began this restructuring in the fall of 2022, resulting in the closure of five restaurant locations. It has since reopened one location after eight months and continues to operate ten units in Northern California.
BurgerFi International, the owner and franchisor of 144 burger and pizza restaurants nationwide, also filed for Chapter 11 bankruptcy protection on September 11. The Florida-based chain is seeking to reorganize after a turnaround plan implemented less than a year ago failed to deliver the desired results. As part of this plan, BurgerFi closed 19 underperforming corporate-owned locations and reduced related operating costs.
Fast-casual chain Dickey’s Barbecue Restaurants has been closing locations across the country. Since reaching a peak of 562 franchise units in 2017, the company has closed a net total of 205 locations since the beginning of fiscal year 2018. Despite this decline, Dickey’s has not filed for bankruptcy and has not indicated plans to do so.
Except for 2021, when it reported nine net openings, the company’s franchise total has declined every year. According to its Franchise Disclosure Document reported by QSR, Dickey’s recorded its steepest decline in franchise restaurant units during the fiscal year ending May 31, 2024, with a net loss of 85 units, dropping from 442 in 2023 to 357 in 2024. The company opened 12 new franchised restaurants but also closed 97.
Dickey’s currently operates 357 franchise locations, along with nine corporate-owned units in Texas and Oklahoma, and 19 international units, bringing its total to 385 restaurants. As of May 31, the company had 19 signed franchise agreements pending opening and expects to launch four new franchises in 2025.
Founded in 1941, the Dallas-based chain offers a menu featuring slow-smoked beef brisket, pulled pork, St. Louis-style ribs, and various smoked meats. Its sides include baked beans, loaded baked potato casserole, fried okra, and mac and cheese, among others.
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