Fast Food Chains That Are Seriously Struggling To Keep Customers

November 2, 2019 0 By William Morgan


Even in the best economy, the restaurant industry
is all about struggle, and now is a particularly
tough time for fast food establishments.
With that in mind, let’s look at some prominent
fast food chains that are currently facing
major problems.
In the nineties, Boston Market was the saving
grace of family dinner.
The chain saw extensive growth thanks to its
fast and easy concept, as its customers could
quickly purchase pre-made sides and dinners.
The concept grew Boston Market to more than
1,100 stores across the U.S. at its peak.
But with other retailers catching on and easily
duplicating ready-to-eat rotisserie, rapid
growth and competitor’s low prices ultimately
led to the company filing for bankruptcy in
1998.
Boston Market has changed hands twice in hopes
of making a comeback, once by McDonald’s in
2000 and then by Sun Capital Partners in 2007.
But even under new ownership, there’s still
been a steady decline of sales.
Currently, there are fewer than 500 locations
left, and in 2019, the chain announced the
closing of 45 more stores.
With many grocery stores and one-stop shop
retailers now offering ready-to-eat rotisserie,
Boston Market needs to find a competitive
edge to convince customers to make an additional
stop in their already hectic schedules.
When Quiznos arrived on the scene, it stockpiled
a huge customer base thanks to its unique
competitive advantage of toasted bread.
This one simple alternative grew Quiznos to
4,700 locations by 2007.
Besides toasting buns, the chain relied heavily
on delivering low prices.
But when Subway decided to bite back in 2005
by introducing its own toasters, Quiznos’
competitive edge was demolished.
And on top of that, Subway then introduced
the now infamous $5 footlong.
To remain competitive, Quiznos began handing
out coupons for free sandwiches.
With the already low profit margins franchisees
were making, some locations refused to accept
them.
You can imagine how customers reacted to that.
In 2014 franchisees were fed up with minimal
profits as Quiznos forced them to purchase
food and paper products at inflated prices.
A lawsuit was filed alleging fraud, and additionally
the company was dealing with a failed buyout
that ultimately led to bankruptcy.
Quiznos survived when it was bought in 2018
by High Bluff, but it still must now contend
with an extremely competitive marketplace
against the likes of Jersey Mike’s, Firehouse
Subs, Jimmy Johns, and, of course, Subway.
Since 1932, Krystal has been serving up burgers
in more than 300 locations scattered across
10 states in the deep south.
But in a highly competitive market dominated
by the likes of McDonald’s and Burger King,
Krystal has found it hard to keep up.
After a 6.5 percent decrease in sales in three
consecutive years, Krystal knew they were
in need of a serious overhaul.
So, in 2018 they welcomed new CEO Paul Macaluso.
Macaluso believed in delivering to his customers
a, quote, “heightened level of accountability
and a sense of urgency,” and in 2019 Krystal
introduced its all-you-can-eat $5.99 burger
and fries.
While deals like this usually tend to hurt
the bottom line, this limited-time offer actually
did the opposite, as customers also purchased
additional drinks and took advantage of add-ons.
Overall, Krystal has increased dine-in sales
by 3 percent, but there is still one major
problem.
Most of Krystal’s restaurants are more than
30 years old and the struggle to keep them
clean is very real.
That is why the chain will be demolishing
and then rebuilding more than 50 locations.
On top of revamping stores, Macaluso also
plans to revamp the restaurant’s operations.
Both of these changes will take an extensive
amount of time, all in a market that may not
allow for it.
“Fundamentally, in this business, if you’re
not growing, you’re dying.”
In 2009, Steak ‘n Shake survived the Great
Recession as one of the industry’s steadiest
performers.
In just one year the chain went from losing
$100,000 a day to generating $100,000 a day,
but now the legacy of the 86-year-old company
is in jeopardy.
It went from seven straight years of profit
gains to a 13 percent decrease in customer
traffic.
Operating losses of $18.9 million in the first
quarter of 2019 have caused more than 100
company-owned Steak ‘n Shakes to close, though
the chain says those closures are temporary.
CEO Sardar Biglari is changing to a more heavily
weighted franchise program, which he hopes
will re-open the doors of the shuttered locations.
Including the recently closed restaurants,
413 of the chain’s 600 locations are currently
company-run.
Biglari is changing this to be a single-unit
franchise strategy in hopes that owners will
be more invested.
The cost to start a Steak ‘n Shake franchise
will be $10,000, much lower than the cost
from years ago.
But bringing in more franchise owners may
not be enough of a solution.
Biglari is focused on overhauling and streamlining
production, part of which means getting rid
of the cherries on top of Steak ‘n Shake’s
iconic milkshakes, a change that he says will
save $1 million.
Alas, Biglari’s time to implement these practices
may be limited, as investors of Steak ‘n Shake
see both pillars of his plan as ridiculous.
Perhaps they’re really big cherry lovers.
“Whipped cream and cherries?”
“Check.”
“Confetti, balloons, and music?”
“Hat.”
“Mike, come on!”
“What are you up to?”
In an effort to keep up with changing customer
demands, Cicis underwent a significant rebranding
in 2015.
Stores with a new layout design began opening
in 2016 and customer reaction has been extremely
positive.
In 2017 there was a 22 percent increase in
the number of guests who would recommend the
unlimited pizza buffet.
But even with higher customer satisfaction
Cicis franchise owners are finding it a struggle
to keep their doors open.
The problem is the cost of operation.
It’s not that expensive to make a pizza, but
many Cicis locations have been struggling
with the rising expenses of labor and property
taxes.
The issue is bad enough that the last Cicis
locations in New York state officially closed
their doors in 2018.
New logos, additions to the buffet line, and
a more streamlined restaurant layout aren’t
going to do much if Cicis restaurants keep
disappearing as rent and wage costs continue
to increase.
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