In the last century or so, under the threshold of consumerism, America became over-retailed. Currently, we have 40 square feet of retail space per person, which is the highest of any other county. With the trend of consumption changing from goods to experiences, 2017 has left malls and retail complexes looking more like a graveyard of Limited Toos and Abercrombies. But, the retail apocalypse is not over and its hungry for more. What’s its next victim? Restaurants.
The names Pizza Hut, Starbucks, McDonald’s and Lone Star are almost synonymous with American dining. Most wouldn’t predict that along with many others of the same stature are suffering from their largest store closings on record. According to Forbes, some of the main reasons are as follows:
Better Local Options- Starbucks is a leading example of this. In every city there are a plethora of local coffee shops, most of which actually have better coffee. Locals are rejecting the corporate structure that lacks the personality that an individual unique shop does. This sentiment rings true not only to coffee shops but also casual dining, family restaurants and more.
Overexpansion –At any major intersection, on every side of the street, there’s a Subway, McDonald’s or some major fast food joint. Bonus points if there’s a Starbucks on at least 2 out of 4 of the corners. This has been the result of overexpansion from chain restaurants. Overexpansion has spread business too thin leaving neither location successful. This has led into the inevitable store closing and overall decline in market value.
The Middle Class– People enjoy the experience and convenience of dining out. As the middle class shrinks and individuals and families have less disposable income, people are looking for more options. Casual dining restaurants with lower price points are on the rise.
Boredom– Consumers are drawn to newness and that is no new revelation. What is, is the pace in which they are demanding it. Legacy brands such as Subway, Applebee’s, and others are struggling to adapt an entire business model quick enough to remain competitive, at least in the way they used to.
When one door closes another opens. In this case that means when one Starbucks closes, a new funkier, cheaper coffee joint is opening. Local options, overexpansion, a shrinking middle class and boredom are main drivers behind one of the largest round of restaurant closings taking place. Not all established restaurants do not have to lose hope. If they, like with any other brand across industries, is the able to remain agile and innovate alongside consumer trends they can create their own staying power before its too late.