The Death of Chain Restaurants

Today, we're going to take a look at the rise and fall of chain restaurants

The rise of fast food chains is directly related to the elaborate highway system America built

during the 1950s and 60s. Those highways encouraged Americans to drive more and to drive further

Naturally, those travelers eventually needed to eat. Consumers on the go are actually much more likely to stop at a familiar place

where they already know what to expect. Chain restaurants provided that familiarity

so not surprisingly, they started popping up everywhere. In the spirit of full disclosure, we should say that a lot of non-fast food restaurant chains were also born in this era

But really, America had become a fast food nation. The success of chain restaurants in the 50s and 60s meant an explosion of them that would last for the next three decades

Revenues peaked in the mid-1990s, but that explosion came with a few more than a few downsides

Chains had come to so completely dominate so many commercial spaces that it had become all but impossible for local mom-and-pop restaurants to survive

That, in turn, had the effect of homogenizing American cities. Vast swaths of America's culinary heritage were lost

But the unfettered expansion of the chain restaurant business could not last forever

With the turn of the new millennium, the good old days were over

Well, not for fast food chains. They mostly kept doing okay. But over the first 10 years of the aughts alone many of America biggest full restaurant chains lost more than 50 of their sales And the 2010s weren really much better Once successful chains had let their brands become stale and their menus become outdated their customers became other people customers and a lot of other places just folded out right

It was a rough time, and it was only going to get rougher. Turns out, the absolutely cutthroat level of competition in the restaurant chain business

had created an opening for a whole new generation of leaner, meaner competitors

Fast, casual chain restaurants. Chipotle was an early successful example of the model

The idea was that fast casuals would be cheaper than full-service restaurants

but still provide a healthier, higher-quality cuisine than what you would expect to get from a fast food joint

In 2009, there were just over 17,000 fast casual restaurants in the U.S., and they did about $19 billion in sales

By 2018, there were 35,000 of them doing nearly $48 billion in business

That success, of course, was slightly tempered by a little something called the COVID-19 pandemic

quarantine was a tough blow for the food service business and restaurant chains were no exception

many didn't survive the chains that did make it through the pandemic

weren't unchanged by the experience in fact a lot of them were very very changed

staying competitive in the pandemic often meant drastic alterations to a chain's menu

adding pickup and delivery options that may not have previously existed the TLDR of it all is that for a whole bunch of reasons

full service chain restaurants just aren't really a reliably lucrative business model anymore

But you may think different. And if so, put your money down and let it ride