The evidence is irrefutable: After a decent start to the year, restaurants are having a tough time luring customers and getting them to spend. The latest earning reports have brought a parade of operations posting second-quarter losses (including the parents of Outback, Joe’s Crab Shack, Noodles and Company and Denny’s). Even longtime high-flyers like Burger King, Buffalo Wild Wings and Taco Bell have suffered a meltdown in comps.
There have been a few exceptions (The Habit and Texas Roadhouse, for example), and pizza chains in particular seem to enjoy some immunity. But the majority of big operations are hurting. In June, comparable-store sales for chain restaurants fell by an average of 3.5%, the largest decline ever recorded by TDn2K, says Bob Rycroft, managing partner of the research firm. But why?
A consensus has yet to emerge, leaving observers to choose from a bevy of theories. Rycroft calls it a “stew” of ingredients ranging from politics to meal kits, “all of which seem to make sense.”
Here are six of the leading contentions, as espoused by financial analysts, researchers, economists and restaurant executives.