Bidenomics... Is Your Favorite fast food restaurant on the list?

Popular Fast Food Chain Closes Doors and Files Chapter 11 Bankruptcy©iStock/Depositphotos

Many people assume that the major fast food chains make such an incredible amount of money that they never struggle, but that’s not entirely true.   While some chains are still thriving, others have noted a severe decrease in profits and consequently have been forced to close some of their locations or even file for bankruptcy. 

Franchising: Understanding the Business Model©Freepik

Before diving into the recent struggles of several fast food chains, it’s first crucial to understand exactly how these stores are owned and operated. The vast majority of fast food restaurants are franchised, which means people can pay a franchise fee to open a location of one of the popular chains. They own this business. However, they follow the format developed by the company, receive the rights to use the company’s recipes and marketing, and maybe even get some assistance from the corporation to succeed.   

Franchising Has Been a Wildly Successful Business Model©iStock

The idea of franchising has existed since the 1800s, though it wasn’t applied to fast food restaurants until the 1950s. At that time, thousands of Americans became business owners by buying McDonald’s, KFC, or Burger King restaurants. For the past 75 years, this model has proven to be wildly successful. Although, there have been times when specific owners were not able to live up to the corporate name in either production or sales. In these cases, the stores often closed, even though the brand was still doing exceptionally well.  

Which Fast Food Chains Aren’t Doing So Well?©Adobe Stock

However, in 2023, something extremely strange happened: Hundreds of Burger King restaurants closed down, and many Popeyes franchise owners filed for bankruptcy.  Both restaurants are owned by Restaurant Brands International, and the company had to step in immediately to assess why this was happening and also see if they could save some of their locations.     

Two More of RBI’s Largest Franchisees Was Filing for Chapter 11 Bankruptcy©Freepik

At the same time, RBI noted that two of its other franchisees, Meridian and Premier Kings, had filed for Chapter 11 bankruptcy and were attempting to sell several of their locations. RBI decided to step in and purchase dozens of Carrols, Premiere King, and Meridian locations, though they were still forced to allow some to close.   

RBI Isn’t the Only Fast Food Company Facing Difficult Times©Wikipedia

While RBI is handling their crisis, another popular but lesser-known fast food chain has all but fallen apart. Bojangles, which originated in South Carolina, now has 800 locations in eight states. However, in 2023, the company closed several of its locations after filing for Chapter 11 bankruptcy. The Bojangles website says the restaurants are still open, though the windows are boarded up. 

The Bojangles Franchisees Are in Quite a Bit of Trouble©iStock

The franchisees who own the closed locations, Salim Kakakhail and Yavir Akbar Durrani, haven’t just lost their businesses; they may also face a state investigation for fraud as many of their employees say they are owed money for their previous work. Former employees of these franchisees also reported that they were told to buy chicken from Popeyes or even Safeway (a local grocery store) and sell it as their own when they ran out.

Bojangles Released a Public Statement Regarding the Scandal©Bojangles

After these rumors made their way around the internet, Bojangles released an official statement regarding the franchisees in question.   

It said, “The franchisee is no longer in the Bojangles system. However, it is important to note in your coverage that franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities."  

Why Are So Many Fast Food Franchises Struggling?©Wikipedia

Of course, the situation at Bojangles seems to be unique. However, at the same time, successful franchisees of Burger King and Popeyes are also closing their doors. So, why are these fast food chains struggling to stay open? Many fast food chains have seen a significant decrease in sales over the past few years as they have increased their pricing. With high inflation rates, tens of millions of Americans are living on less to spend than ever before, and many have decided to cut out fast food to save money.

Changes to Minimum Wage Is Also Playing a Part©Shutterstock

Additionally, while sales are decreasing, costs for fast food chains are increasing as several states are raising the minimum wage.   

In fact, Governor Newsom in California recently passed a bill that raised the minimum wage for fast food workers from $16 to $20, a jump that could lead to more restaurant closings around the state. 

Which Fast Food Chains Are Next?©iStock

In addition to the dozens of Popeyes, Burger King, and Bojangles locations that have closed their doors, reports say popular restaurants like Taco Bell, KFC, and Pizza Hut may be next.  So, while there will likely always be plenty of fast food options in America, there’s no denying that for the first time in decades, the industry is certainly struggling.