Those of you hoping that 2025 would be a better year than 2024 have been treated to a steady dose of disappointment so far this year.
Just take a look at the news from the past few days:
Starbucks is laying off 1,100 people.
Hooters is preparing for a likely bankruptcy filing, which would only be third-biggest such filing in the past year.
Bloomin’ Brands, the parent of Outback Steakhouse, is laying off workers. This followed a similar report from Applebee’s.
Restaurant chain after restaurant chain after restaurant chain have reported weak, early-year earnings beyond that which can be blamed on weather.
To be sure, we are journalists, and as such we tend to feed the masses a steady diet of bad news, even when things aren’t all that bad. And yet the news flow has taken the wind out of expectations that the year would start out better.
As a reminder, early last year there had been indications that sales were turning around, as marketing promotions at McDonald’s, Burger King and Wendy’s both showed promise and various sales trackers showed improvement.
Operators expressed some optimism and that was reflected in outlooks from organizations such as Technomic or the National Restaurant Association.
To be sure, some of the news coming out this year is simply a reaction to last year’s problems, which is certainly true in the case of the layoffs. Starbucks in particular is engineering a turnaround strategy following the most difficult year it’s had in 15 years outside of the pandemic.
Bankruptcies, too, tend to be the result of problems in the past.
At the same time, however, the overwhelming evidence suggests that 2025 won’t be all that different from 2024. On Monday, Domino’s CEO Russell Weiner added his voice to the chorus of executives suggesting a still-sluggish restaurant market that should continue all year.
“As we look ahead to 2025, we believe the combination of pressured consumer spending and a value-driven QSR market will continue,” he told analysts.
But Domino’s numbers also demonstrate the problem associated with that market. The company earlier last year suggested that its average store profitability would be $170,000 in 2024. It finished at $162,000, a substantial shortfall. Sales weakness and a major focus on value offers ultimately hit profitability.
Most executives—Domino’s included—have been optimistic that things will get better, but for the most part they are bullish on their own strategies, coupled perhaps with less bad weather.
Nevertheless, the year is starting out just like last year did. And that’s not a good thing.