Why are so many long-standing national sit-down restaurants going into bankruptcy or closing?

As 2024 unfolds, the retail and dining landscape continues to evolve at a rapid pace. Casual dining chains like Red Lobster and TGI Fridays are facing significant financial challenges and have recently announced bankruptcies and a series of mass closures. Other restaurants, such as Outback, Cracker Barrel, and Burger Fi, are closing underperforming stores.

𝙒𝙝𝙖𝙩’𝙨 𝙘𝙖𝙪𝙨𝙞𝙣𝙜 𝙩𝙝𝙞𝙨 𝙨𝙝𝙞𝙛𝙩, 𝙖𝙣𝙙 𝙝𝙤𝙬 𝙖𝙧𝙚 𝙘𝙚𝙧𝙩𝙖𝙞𝙣 𝙨𝙚𝙜𝙢𝙚𝙣𝙩𝙨 𝙤𝙛 𝙩𝙝𝙚 𝙢𝙖𝙧𝙠𝙚𝙩 𝙩𝙝𝙧𝙞𝙫𝙞𝙣𝙜 𝙞𝙣 𝙨𝙥𝙞𝙩𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙘𝙝𝙖𝙡𝙡𝙚𝙣𝙜𝙚𝙨?

Though macroeconomic challenges affected the entire restaurant industry in 2023, casual dining took the hardest hit. According to Technomic’s Top 500 report, limited-service restaurants outpaced casual dining, with sales growing at 8.5% compared to just 5% for full-service operators, thanks partly to strong years of established brands like Starbucks, Chick-fil-A, and Chipotle. Limited-service sales also got a boost from growth chains such as 7 Brew, Dave’s Hot Chicken, and Just Salad.

Full-service operators clocked a more modest increase of 5% growth.  Chicken chains have outpaced the top 500 chains’ average sales growth, with 2023 marking the category’s fifth year of double-digit growth (up more than 12%.) 

Chicken Rules The Roost: Limited-service chicken sales have increased over the past five years, both at fast-casual and quick-service chains. (www.restaurantbusinessonline.com)

𝘾𝙖𝙨𝙪𝙖𝙡 𝙙𝙞𝙣𝙞𝙣𝙜, 𝙝𝙤𝙬𝙚𝙫𝙚𝙧, 𝙨𝙩𝙧𝙪𝙜𝙜𝙡𝙚𝙙 𝙩𝙤 𝙠𝙚𝙚𝙥 𝙪𝙥. Changing consumer preferences, rising operational costs, and the increased demand for convenience have led to sit-down restaurants falling behind. Many full-service restaurants have failed to pivot quickly enough, resulting in closures and bankruptcies. Pickup and delivery have become the new normal, with restaurants increasingly tailoring their menus to optimize their on-the-go offerings.

Nonetheless, some full-service brands, such as Longhorn Steakhouse, Outback Steakhouse, and Miller’s Ale House, continue to seek opportunities in certain Georgia markets. If you have a Publix, there’s a good chance that these concepts would be interested. Off-price retailers such as Five Below, Dollar Tree, and Marshalls are also on the hunt for new deals, aligning with broader retail trends where value and convenience are paramount.

Retail Landscape Overview

Nationwide, retail has evolved toward a “phygital” (physical-digital) model, where retailers merge in-store and online shopping to create seamless customer experiences. Key factors like convenience, sustainability, and value-focused shopping are driving both consumer preferences and retailer strategies.

Some major trends include:

• The Rise of Private Labels and Off-Price Retailers: Economic factors have increased demand for affordable, high-quality alternatives. Retailers like Aldi, Trader Joe’s, and Target’s private-label lines are expanding and are especially popular with cost-conscious consumers.
• Growth in Convenience-Driven Retail: With online and mobile shopping widely embraced, grocery and fast-casual dining expansions remain robust. Chains such as Publix and various coffee and automotive service brands are actively expanding in the Southeast. (www.explodingtopics.com)
• Sustainability and Resale Markets: As sustainability influences more shopping choices, communities that prioritize eco-friendly practices may attract interest from brands engaged in resale, such as Patagonia and ThredUp, or green initiatives, such as those seen in branded resale platforms. (www.nrf.com)
• Messaging Apps take the wheel in the shopping journey: Why? Because messaging apps are where consumers spend time, ideal for embedding intuitive shopping experiences. They also provide real-time, personalized offers and support, delivered exactly when and where customers want to engage. (www.salesforce.com)

Tips for Attracting Retail to Your Community

For communities aiming to attract retail investment, understanding current retail trends and leveraging regional strengths are essential steps.

Utilize local data to highlight demand:
Retailers make location decisions based on data showing local demand. Therefore, communities should track and share insights like population growth, income, housing permits, and traffic patterns to showcase market potential. Highlighting unlisted properties and incentives can further boost appeal.
Focus on convenience-driven and essential retail:
For regions where foot traffic and accessible locations are high, consider targeting grocery, discount, and quick-service restaurant brands. These sectors are expanding in the Southeast due to steady demand and population growth.
Promote sustainability initiatives:
Showcasing eco-friendly initiatives, such as infrastructure for electric vehicles, recycling programs, or support for local food systems, can make your community more attractive to retailers prioritizing these values.
Leverage local and regional partnerships:
Highlighting partnerships with city managers, utility providers, and economic development teams reassures retailers of the community’s commitment to their success. It provides potential retailers with the full scope of support and resources available.
Invest in infrastructure and supportive zoning:
Infrastructure improvements through streamlined permitting processes, zoning that accommodates mixed-use developments, high-speed internet, and reliable utilities not only attract retailers but also help create a thriving ecosystem that supports both consumers and businesses.

ICSC @Southeast Recap:

At ECG, we value the importance of being an ICSC member and having a voice in retail and commercial development. We are constantly telling the story of our Georgia cities and how we can add value to the decision-making process for retailers and developers. A few takeaways from the show:

• 𝗖𝗼𝗳𝗳𝗲𝗲: 𝖳𝗁𝖾 𝖼𝗈𝖿𝖿𝖾𝖾 𝗆𝖺𝗋𝗄𝖾𝗍𝗉𝗅𝖺𝖼𝖾 𝗂𝗌 𝖾𝖺𝗀𝖾𝗋 𝖿𝗈𝗋 𝗇𝖾𝗐 𝗌𝗍𝗈𝗋𝖾 𝗅𝗈𝖼𝖺𝗍𝗂𝗈𝗇𝗌. 𝖢𝗈𝗇𝖼𝖾𝗉𝗍𝗌 𝗌𝗎𝖼𝗁 𝖺𝗌 𝖤𝗅𝗅𝗂𝖺𝗇𝗈𝗌, 𝟩𝖡𝗋𝖾𝗐, 𝖲𝗍𝖺𝗋𝖻𝗎𝖼𝗄𝗌, 𝖺𝗇𝖽 𝖣𝗎𝗍𝖼𝗁 𝖡𝗋𝗈𝗌 𝖺𝗋𝖾 𝗅𝗈𝗈𝗄𝗂𝗇𝗀 𝖿𝗈𝗋 𝗇𝖾𝗐 𝗌𝗂𝗍𝖾𝗌 𝖺𝖼𝗋𝗈𝗌𝗌 𝖦𝖾𝗈𝗋𝗀𝗂𝖺.
• 𝗔𝘂𝘁𝗼𝗺𝗼𝘁𝗶𝘃𝗲: 𝖢𝖺𝗋 𝖶𝖺𝗌𝗁𝖾𝗌 𝖺𝗇𝖽 𝖠𝗎𝗍𝗈 𝖯𝖺𝗋𝗍𝗌 𝗌𝗍𝗈𝗋𝖾𝗌 𝗇𝖾𝖾𝖽 𝗆𝗈𝗋𝖾 𝗅𝗈𝖼𝖺𝗍𝗂𝗈𝗇𝗌 𝗂𝗇 𝖦𝖾𝗈𝗋𝗀𝗂𝖺.
• 𝗢𝗳𝗳-𝗣𝗿𝗶𝗰𝗲 𝗥𝗲𝘁𝗮𝗶𝗹: 𝖥𝗂𝗏𝖾 𝖡𝖾𝗅𝗈𝗐, 𝖣𝗈𝗅𝗅𝖺𝗋 𝖳𝗋𝖾𝖾, 𝖬𝖺𝗋𝗌𝗁𝖺𝗅𝗅𝗌, 𝖱𝗈𝗌𝗌, 𝖺𝗇𝖽 𝖡𝗎𝗋𝗅𝗂𝗇𝗀𝗍𝗈𝗇 𝖺𝗋𝖾 𝗌𝗍𝗂𝗅𝗅 𝗅𝗈𝗈𝗄𝗂𝗇𝗀 𝖿𝗈𝗋 𝗇𝖾𝗐 𝖽𝖾𝖺𝗅𝗌.
• 𝗦𝗶𝘁 𝗗𝗼𝘄𝗻 𝗥𝗲𝘀𝘁𝗮𝘂𝗿𝗮𝗻𝘁𝘀: 𝖠𝗌 𝗆𝖾𝗇𝗍𝗂𝗈𝗇𝖾𝖽 𝖺𝖻𝗈𝗏𝖾, 𝗍𝗁𝗂𝗌 𝗌𝖾𝖼𝗍𝗈𝗋 𝗂𝗌 𝗏𝖾𝗋𝗒 𝗅𝗂𝗆𝗂𝗍𝖾𝖽 𝗈𝗇 𝖾𝗑𝗉𝖺𝗇𝗌𝗂𝗈𝗇; 𝗁𝗈𝗐𝖾𝗏𝖾𝗋, 𝖫𝗈𝗇𝗀𝗁𝗈𝗋𝗇, 𝖮𝗎𝗍𝖻𝖺𝖼𝗄, 𝖺𝗇𝖽 𝖬𝗂𝗅𝗅𝖾𝗋’𝗌 𝖠𝗅𝖾 𝖧𝗈𝗎𝗌𝖾 𝖺𝗋𝖾 𝖾𝗏𝖺𝗅𝗎𝖺𝗍𝗂𝗇𝗀 𝗌𝗉𝖾𝖼𝗂𝖿𝗂𝖼 𝗀𝗋𝗈𝗐𝗍𝗁 𝗆𝖺𝗋𝗄𝖾𝗍𝗌 𝗂𝗇 𝖦𝖾𝗈𝗋𝗀𝗂𝖺. 𝖥𝖺𝗌𝗍 𝖢𝖺𝗌𝗎𝖺𝗅 𝖼𝗈𝗇𝗍𝗂𝗇𝗎𝖾𝗌 𝗍𝗈 𝖽𝗈𝗆𝗂𝗇𝖺𝗍𝖾 𝖿𝗈𝗋 𝖾𝗑𝗉𝖺𝗇𝗌𝗂𝗈𝗇.

Thank you to all of our ECG cities for your partnership in Growing Georgia Together!