- Overstoring. Some chains simply opened more units than the marketplace could bear during the go-go days. That was the case with Starbucks, which once seemed to be a perpetual-motion machine for rapid store openings. The company was wrapping up its restructuring last year with 300 more closures, but is back in growth mode now, with more than 600 new stores so far this year. Hopefully locations are being more selectively chosen now.
- Poor locations. In the rush to grow fast and beat the competition, not every site selected turned out to be ideal. Some older chains are stuck with underperforming, legacy units. Then the economy came along to serve as last straw, and some of these units were shuttered. KFC is an example — some stores are shiny new while others are old and outdated. The chain took steps to cull the pack, cutting 275 laggard units last year.
- Franchisors letting go. When a franchised store can’t make it, in good times the corporate parent might buy back the unit and shop around for another franchise owner for it. But there are only so many units they can take on responsibility for managing before the focus of the chain gets muddled and swings away from serving franchisees. In the down economy, franchisors may be making more choices to let dog locations close their doors.
- Internecine warfare. Second-biggest sub-sandwich chain Quiznos has had troubled relationships with its franchisees for years. Lawsuits have been settled, but there’s a lot of fence-mending left to do. In the meanwhile, the chain has shrunk steadily and closed more than 300 units last year to shrink to 2,500 stores. Rival Subway now dwarfs Quiznos with nearly 25,000 units, including more than 800 added last year.
- Stale offering. Sbarro was once the hit pizza purveyor of every mall and airport food court. Then, tastier upstarts came along and their luster began to wane. Now, Sbarro has shed 70 units and is undergoing a major revamp of everything from its look to its menu.
It’ll take more than an economic turnaround to revive some of these brands. The days when there weren’t many big franchise restaurant chains and it was easy to stamp out weaker mom-and-pop operators and grab market share are over — and the chains that survive will need to hit on all cylinders with fresh, tasty food, remarkable branding, and good locations.
To take a look at all 10 of the top fast-food chains that closed the most units in the past year, click here.