The Collapse of American Restaurant Chains: ‘Shark Tank’ Star Explains the Mass Closures and Predicts More to Come

By: Georgia | Published: Jun 12, 2024

Restaurants across the U.S. are shutting down in droves. 

“Shark Tank” star Kevin O’Leary sheds light on the cascade of closures, hinting that this troubling trend isn’t slowing down anytime soon.

Big Names, Bigger Problems

Even giants like Red Lobster and Cracker Barrel are feeling the heat.

View of the exterior of a Cracker Barrel restaurant showing its iconic signage and rustic wooden architecture with multiple rocking chairs lined up outside

Source: Wikimedia Commons

With Red Lobster filing for Chapter 11 and Cracker Barrel’s stocks tumbling, it’s clear that no brand is too big to fail in this harsh climate.


From Booming to Bankrupt

Remember the bustling Boston Market chain? 

Two people eating at an outdoor Boston Market setting, enjoying a meal with a variety of dishes including chicken, salads, and cornbread

Source: Boston Market/Facebook

From over a thousand locations to just two dozen, their dramatic downsizing tells a tale of the times.

Inflation’s Tight Grip

The root of the problem? Inflation. 

Kevin O'Leary walking alongside two female colleagues through the United Nations assembly hall, all dressed in formal attire

Source: kevinolearytv/X

Kevin O’Leary explains, “It’s proof the inflation virus is still infecting America’s post-pandemic economy,” highlighting how rising food costs are devouring profits.

Supply Chain Struggles Persist

Post-pandemic recovery isn’t going as planned.

Close-up of raw chicken thighs seasoned with orange marinade on a grill rack, prepared for cooking

Source: Wikimedia Commons

With supply chains still in disarray, the increased costs for essentials like chicken and beef are hitting restaurants hard.

A Shift in Dining Habits

The pandemic changed how we eat—literally. 

An Uber Eats delivery person with a branded insulated backpack walking past a busy city street with taxis and cars

Source: Wikimedia Commons

Forced indoors, millions tried online food ordering for the first time. Now, they’re sticking to takeout over table service, leaving many dining rooms deserted.


Home Office, Home Lunch

Thanks to remote work, the lunchtime rush isn’t rushing back. 

Close-up of a person's hands chopping fresh cilantro on a wooden cutting board in a well-lit kitchen

Source: Alyson McPhee/Unsplash

With fewer workers downtown, eateries that thrived on business crowds are seeing a stark decline in customers.


Survival Through Transformation

Adapt or close—those are the stark choices facing many. 

An open cardboard box containing a hamburger with lettuce and tomato, accompanied by a generous serving of French fries

Source: Quin Engle/Unsplash

Restaurants are converting into takeout-only setups, a last-ditch effort to keep kitchens cooking and cash registers ringing.


Downturn in Consumer Spending on Dining

Kevin O’Leary notes, “However, there’s nothing to be done when consumers simply refuse to spend.” 

A young woman happily eating a chicken wing in a bustling restaurant setting with other diners enjoying various meals and drinks around her

Source: Alex Haney/Unsplash

This stark observation illustrates the significant pullback in discretionary spending, with dining out being one of the first expenditures consumers are cutting.


Fine Dining Faces Dire Straits

The high-end dining sector is particularly hard hit, with places like BurgerFi contemplating bankruptcy as fewer customers can justify the expense of high-end meals. 

Inside view of a BurgerFi restaurant, featuring modern decor with wooden walls, industrial style lighting

Source: Wikimedia Commons

This trend shows a shift towards more economical dining choices amid tightening personal budgets.


California’s New Wage Law Shakes Local Restaurants

“Newsom signed a law… making decades-old businesses unprofitable overnight,” Kevin O’Leary said.

California Governor Gavin Newsom speaking at a podium with a focused expression, gesturing with one hand, against a backdrop featuring the California state flag

Source: Wikimedia Commons

He highlighted the immediate and profound impact of California’s new minimum wage law on the profitability of fast-food operations across the state.


The Bigger Economic Picture

It’s not just about where we eat, but about who’s left to serve us. As mom-and-pop places shutter, the ripple effects through the economy are palpable, challenging the effectiveness of recent economic policies. 

Exterior night view of a restaurant kitchen through a large window, showing a chef and a helper preparing food with a bright neon 'OPEN' sign illuminated above the window

Source: Khachik Simonian/Unsplash

O’Leary said simply, “It’s not working,” a stark reminder of the ongoing struggle within the U.S. dining and economic landscape.