A former fast food giant says the industry will likely shrink dramatically in the coming years as prices skyrocket and chains scramble to introduce new promotions.
Andy Puzder, the former CEO of the parent company that owns fast food icons Hardee’s and Carl’s Jr, made the bold prediction Tuesday on Fox Business’s Varney & Co.
“There will be a lot of restaurants underperforming,” Mr Puzder told the outlet. “Middle-performing restaurants are going to go away. Very good-performing restaurants will become middling or low-performing restaurants.”
Mr Puzder, who has been described as the “sworn foe” of minimum wage, was initially Donald Trump’s pick for Secretary of Labor in 2017. However, the former CEO withdrew his nomination as he faced allegations of domestic abuse and mistreating his workers. Many of his former employees also testified against him before the Senate.
“As more restaurants close, there’ll be more customers for fewer restaurants,” Mr Puzder continued. “But people just can’t afford these prices. And there’s only so much you can do to reduce prices.”
foxbusiness.comFast-food restaurants appear to be already scrambling to beat their predicted fate.
McDonald’s recently announced a $5 meal deal that will last for four weeks beginning at the end of June — a deal that comes after they revealed franchise owners can begin charging customers for drink refills.
However, Burger King swooped in and announced their own $5 meal last week that is set to begin before McDonald’s and last longer.
Meanwhile, Wendy’s announced a $3 breakfast deal this month.
Chains with a large presence in California are hiking their prices amid a new law requiring fast food stores to pay staff a $20 minimum wage.
McDonald’s also reported lower-than-expected Q1 results in 2024 amid an ongoing boycott due to its presence in Israel. The results showed a drop in international franchised markets for the first time since 2020 when the Covid-19 pandemic began.
“It was hard when I did it,” Mr Puzder said. “It’s a very competitive business, you’re really out there, it’s very cutthroat.”
Rising inflation across industries has caused consumers to eat at home more and more.
Other restaurants are also suffering.
Red Lobster filed for bankruptcy last week after closing dozens of stores throughout the US. The mid-tier dining chain, however, will remain open across some 650 locations — for now.
“This restructuring is the best path forward for Red Lobster,” Red Lobster CEO Jonathan Tibus said at the time. “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth.”
National grocery brands are also taking a hit as more and more consumers opt for store-brand products amid rising prices.
Over the last year, store brand sales have grown nearly 5 per cent across departments, while national brand sales have fallen about 3 per cent. Store brands — such as those offered by Kroger or Walmart’s Great Value line — are often significantly cheaper than recognizable names.
