The restaurant industry has always been a tough arena. Thin margins, fickle customers, relentless competition – it’s never been a walk in the park. Yet what’s been unfolding from 2024 through 2026 is something altogether different. A wave of closures, bankruptcies, and collapsing foot traffic has hit chains that many Americans grew up with, places that once felt as permanent as the highways they lined.
Some of these stories are sad. Others are honestly a little shocking. A few are the kind of slow-motion collapse that, in hindsight, you could see coming from miles away. Let’s dive in.
Table of Contents
1. TGI Fridays: A Bankruptcy That Keeps Getting Worse
There’s no gentle way to put it: TGI Fridays is in freefall. Once one of America’s most beloved casual dining spots, the brand gradually came to feel outdated as new competitors captured diners’ attention. The decline culminated in a Chapter 11 bankruptcy filing in November 2024, marking a dramatic low point in the chain’s long history.
In the bankruptcy filing, TGI Fridays stated it wouldn’t be closing any restaurants, but just a few months later it shuttered 30 locations. This followed widespread closures in the lead-up to the filing, and by the end of April 2025 the chain had just 85 locations around the country. For context, there were once hundreds. That is a breathtaking collapse for a brand that once defined American casual dining.
TGI Fridays closed 134 restaurants in 2024 alone and filed for Chapter 11 bankruptcy that same year. As of late 2025, just 79 TGI Fridays locations remain in operation. Looking ahead into 2026, the brand faces a critical crossroads – without a bold and convincing reinvention, its future in the highly competitive casual dining market looks increasingly uncertain.
2. Red Lobster: A Seafood Legend That Swam Into Trouble
Red Lobster filed for Chapter 11 bankruptcy protection in May 2024, having accumulated nearly $300 million in debt. The company cited rising costs, declining consumer traffic, and significant financial losses from its $20 all-you-can-eat shrimp promotion. That endless shrimp deal, meant to draw customers in, ended up becoming one of the most talked-about business blunders in modern restaurant history.
Red Lobster experienced a sales drop of nearly 23 percent in 2024, falling to approximately $1.68 billion, while its restaurant count plunged 20 percent to 518 locations, according to Technomic. Despite turnaround efforts post-bankruptcy, such as streamlining its menu, customer visits continued to fall, plunging 31 percent in January 2025, 35 percent in February, and 24 percent in March, according to Placer.ai.
The seafood chain shuttered roughly 130 restaurants during its bankruptcy process, and while CEO Damola Adamolekun has said visits have risen with sales up about 10% from a year prior, they still haven’t recovered to pre-bankruptcy levels. Further closures could still number in the dozens, according to people familiar with the company’s discussions. The road back is long, and the obstacles are real.
3. Denny’s: The All-Night Diner Running Out of Time
Denny’s experienced a terrible 2024 and has been struggling to stay in business. Toward the end of the year, it announced it was closing 50 restaurants in just a few months, citing underperformance, and this followed a difficult period in which a large number of its locations had already stopped operating round-the-clock to save money.
In its latest update, Denny’s announced the closure of an additional 100 restaurants throughout 2025. That brings the total to roughly 180 closures over just two years – a striking figure for a brand built on the promise of being “always open, always welcoming.
The chain attributed the decline to weakening traditional sit-down breakfast traffic, as more diners opted for faster, lower-cost drive-thru alternatives over full-service meals. By the end of 2025, over 150 locations had shuttered, underscoring just how much the once-iconic diner chain has fallen in the competitive casual dining landscape of 2026.
4. Starbucks: Six Straight Quarters of Declining Sales
Starbucks reported declining sales for six straight quarters, as shoppers began choosing either cheaper options or upgrading to fancier specialty shops. Meanwhile, Starbucks found itself stuck in the middle: too fancy to be basic, too basic to be fancy. It’s a peculiar position for the world’s most recognizable coffee brand to land in, but here we are.
Starbucks said it would close underperforming stores in North America, including its iconic Seattle roastery, as CEO Brian Niccol pressed ahead with a restructuring effort expected to cost around $1 billion. The overall U.S. and Canada store count was expected to drop by roughly 1 percent, meaning several hundred stores, by the end of the 2025 fiscal year.
In its first-quarter earnings report for fiscal year 2025, Starbucks revealed that its comparable store sales in the U.S. declined by 4 percent year over year, and comparable transactions shrank by 8 percent. U.S. operating income also decreased by 22 percent compared to the same period the prior year. Some more encouraging signs emerged in early 2026, when Starbucks reported a global comparable store sales increase of 4 percent year over year in Q1 of fiscal 2026. Whether this signals a true recovery remains to be seen.
5. KFC: Losing Ground in Its Own Backyard
It might surprise you to hear that KFC, one of the planet’s most recognized fast food brands, is quietly struggling in America. Let’s be real – this one stings a little. KFC’s same-store sales dropped by 7 percent in the United States during the first quarter of 2024. David Gibbs, CEO of KFC parent company Yum Brands, admitted during a May earnings call that the chain “has been struggling” in the United States, blaming the declines on fierce competition from rival chicken chains and rough weather.
According to Circana’s Definitive U.S. Restaurant Ranking 2025 report, chicken chains including Raising Cane’s, Wingstop, Chick-fil-A, Zaxby’s, Bojangles and Popeyes all saw consumer spending increase in 2024, while KFC saw consumer spending fall by 4 percent to $4.34 billion.
KFC sales declined by a massive 5 percent in the second quarter of 2025, continuing a downward trend that had also seen a similar 5 percent decrease at the end of 2024. In summer 2024, KFC suddenly closed multiple locations in Illinois, with nearly a dozen locations shuttering in one region alone. The brand’s famous identity in America is losing its grip – and competitors with fresher identities are eating its lunch.
6. Subway: Shrinking From Its Own Peak
Subway is one of those brands that still feels omnipresent. Walk through any mall, any airport, any strip mall – there it is. But the numbers beneath that familiarity are less comforting. The famous sandwich chain has around 20,000 locations across the United States, but it once had far more. At its peak in 2015, it had approximately 27,000 restaurants, and that number has been gradually sinking ever since.
In 2024, Subway had to close a massive 631 restaurants in the U.S., and it spent much of 2025 without a permanent CEO, leaving the company adrift at a time of crisis. That leadership vacuum, right in the middle of a turbulent period, is the kind of problem that tends to compound every other problem a company faces.
Here’s the thing about Subway’s decline – it’s deceptive precisely because the chain is still so large. You don’t notice the erosion until you step back and see the full picture. Losing roughly 7,000 locations over a decade is not a minor adjustment. It is a fundamental shift in trajectory, and without credible leadership and a compelling product story, it’s hard to see where the floor is.
7. Applebee’s: A Neighborhood Grill That Lost Its Neighborhood
Applebee’s used to be the reliable go-to for a casual weeknight dinner. Nothing fancy, nothing risky – just a dependable plate of food and a half-priced apps deal. That formula, which worked brilliantly for decades, now seems to be running out of steam. Over the last several years, Applebee’s has faced numerous closures, shuttering around 300 restaurants since 2017. Applebee’s closed 46 locations in a single year, and its parent company, Dine Brands Global, anticipated another 25 to 35 closures throughout 2024. Entering 2026, these trends highlight the ongoing challenges the chain faces in a crowded casual dining market.
Applebee’s domestic same-store sales decreased for three consecutive quarters, according to Restaurant Dive, dropping 0.5 percent in the fourth quarter, with the decrease tied directly to declining traffic. Declining traffic is the retail world’s version of a slow leak. It doesn’t look dramatic at first, but left unaddressed, it’s fatal.
In 2024, sales across the casual dining sector as a whole dropped 0.9 percent, while growing 0.6 percent at fast-casual chains and 1 percent at fast-food chains, according to data from Black Box Intelligence. Applebee’s sits squarely in the casual dining camp, which makes its situation structurally difficult. The parent company is now betting on dual-branded locations with IHOP as a lifeline, but whether that’s a genuine solution or a creative delay remains an open question.
8. Papa John’s: Pizza Problems That Won’t Quit
![8. Papa John's: Pizza Problems That Won't Quit (Photo by user fatLouie [sic], CC BY-SA 2.5)](https://nvmwebsites-budwg5g9avh3epea.z03.azurefd.net/easymugcakes/6e184db98999d4672f8d991424668d10.webp)
Papa John’s has faced a challenging period, and the numbers make it clear. The fast-casual pizza market remains highly competitive, and Papa John’s struggled more than many in 2024. The chain reported a 3% overall revenue decline that year, with its third quarter marking the third consecutive quarterly drop – its weakest performance since Q2 2019. Entering 2026, the brand still faces significant hurdles in regaining momentum.
Papa John’s closed more than 170 restaurants worldwide during the first three quarters of 2025, including over 60 in the United States. Many closures happened in weaker international markets, but domestic locations were also affected. Even after these reductions, the chain still maintains nearly 6,000 locations worldwide.
I think what makes Papa John’s situation particularly tricky is competition. The pizza space is brutally crowded, with local independents, fast-casual newcomers, and delivery-first brands all fighting for the same customer. When your product isn’t clearly differentiated and your prices aren’t the most attractive, you’re fighting uphill. Papa John’s endured a challenging 2024, with only modest improvement in 2025. Heading into 2026, that track record doesn’t exactly inspire confidence, signaling that the brand will need more than incremental gains to regain its footing in a fiercely competitive pizza market.
9. Arby’s: A Quiet Decline Few Saw Coming
Arby’s doesn’t typically top anyone’s list of struggling chains, which is precisely what makes its recent performance so surprising. Arby’s parent company, Inspire Brands, reported total sales of $29.5 billion in 2024 across its portfolio, but Arby’s posted the weakest performance among its six sister brands, with sales declining by 6.3 percent that year. The chain also closed 48 locations, representing a net loss of roughly 1.4 percent of its stores.
Although Arby’s has not released an official statement regarding the reason behind its recent closures, the shutdowns continued into 2025, with at least 14 locations closed across eight states. Finance Buzz reported that menu prices increased between 39 and 100 percent from 2014 to 2024, outpacing the national inflation rate of 33 percent during the same period, with Arby’s among the brands that raised prices by roughly 55 percent.
Arby’s faces rising food, labor, and rent costs, paired with decreased consumer spending and reduced foot traffic, which have slimmed the chances of survival for the chain and many others across the industry. Arby’s, Wendy’s, and Burger King have all closed several locations in recent periods, with Wendy’s planning to close around 300 stores by the end of 2026. The broader pressure is real, and Arby’s, despite its iconic roast beef sandwiches, is not immune to the tide.
The Bigger Picture Behind the Closures
What’s happening to these chains isn’t just a series of isolated business failures. It reflects something larger. The 500 largest restaurant chains in the U.S. experienced a slowdown in sales performance in 2024, increasing by just 3 percent. Weakening sales momentum for several top-ranked chains was a key reason the Top 500 fell short of growth seen in recent years. The industry faced significant headwinds including higher prices, shifting consumer spending patterns, and increased competition.
According to Restaurant Dive, most restaurant operators faced rising food costs in 2024, with nearly as many also contending with higher labor expenses. These pressures carried into 2025, putting even more strain on already thin margins. The financial stress was evident across the industry – 20 companies filed for Chapter 11 bankruptcy in 2024, the highest number since 2020 at the height of the pandemic. As 2026 begins, many operators are still navigating these ongoing cost and labor challenges.
The National Restaurant Association reported that roughly three-quarters of restaurant traffic came from off-premise orders in 2024, a trend that continued into 2025. Restaurants that relied on in-person dining but failed to pivot to fast, reliable off-premise service struggled to maintain revenue. The dining world has changed, and the brands that don’t adapt are paying a steep price for it. What do you think – are any of these names on your local restaurant list? Tell us in the comments.