Why Even Big Restaurant Chains Struggle—And What We Can Learn

The restaurant industry is facing tough challenges, from high rent costs to shifting consumer habits. Here’s why even major chains are struggling—and what restaurant owners can do to stay ahead.

CAREER & LEARNING

Leo

3/18/20252 min read

The Harsh Reality of the Restaurant Business

If you’ve ever dreamed of opening a restaurant, you’ve probably imagined a cozy space, the aroma of fresh food filling the air, and happy customers raving about your signature dish. What you probably haven’t imagined is drowning in rent payments, fighting rising costs, and waking up to the news that yet another big-name chain just went under.

Yep, the restaurant business is brutal. And if you need proof, look no further than On the Border, the once-thriving Mexican chain that just closed 77 locations after filing for bankruptcy. If even established brands are struggling, what does that mean for smaller restaurants trying to survive?

1. Rent Is Eating Restaurants Alive

One of On the Border’s biggest problems? Sky-high rent. In 2024 alone, they spent $25.3 million on leases—half of which was for underperforming locations. That’s like paying for a gym membership you never use... but at hundreds of thousands of dollars a month.

The lesson here? Location is everything, but so is negotiating a smart lease. If you’re a restaurant owner, don’t just pick the hottest spot in town—make sure the numbers actually make sense long-term.

2. Consumer Habits Are Changing—Fast

People love eating out, but they also love convenience. That’s why food delivery apps, ghost kitchens, and meal kits are booming. Traditional dine-in restaurants? Not so much.

Even big chains are struggling to keep up with changing habits. If your restaurant isn’t adapting—whether it’s offering online ordering, faster service, or unique experiences—you might be left behind.

3. Profit Margins Are Razor-Thin

Running a restaurant isn’t just about making great food—it’s about managing costs. Between inflation, labor shortages, and expensive ingredients, even high-traffic restaurants can struggle to stay profitable.

This is why more businesses are getting creative:
✅ Smaller, focused menus to reduce waste
✅ Tech-driven solutions like self-ordering kiosks
✅ Flexible pricing models like dynamic pricing (yes, like Uber surge pricing, but for tacos)

So… Is the Restaurant Business Doomed?

Not at all! But adaptation is key. The restaurants that survive are the ones that embrace change—whether it’s smarter leases, new revenue streams, or innovative customer experiences.

If you’re in the restaurant industry, here’s your challenge: How can you evolve with the times? Maybe it’s adding a grab-and-go option, leaning into social media marketing, or finally getting that drive-thru window. Whatever it is, staying ahead of the curve is the only way to thrive.