Sometimes a business has to shrink to grow, or at least that’s what executives, including Wendy’s CFO Ken Cook, say when they explain why they’re closing businesses.
“We are focused on improving the economics at the restaurant level, taking a hard look at underperforming restaurants in our system from both a financial and customer perspective, and working with franchisees to improve them, transfer them to another operator or potentially close them,” he said during a meeting with the chain. third quarter earnings reports.
Closing up to 350 restaurants, he said, would improve the financial performance of those that remain and leave franchise operators with money to invest in their remaining locations.
Long John Silver’s, an iconic fast-food chain like Wendy’s, is also closing locations, down from more than 1,000 locations in 2015 to less than 500 now, based on The Consumer Edge 2026 Restaurant Outlook the report
At its peak, the chain reportedly operated more than 1,400 restaurants Food republic.
The company’s senior vice president, Tony Ellis, like Cook, believes the closings, at least those that have occurred in the past three years, have actually put the seafood chain in a strong position to return to growth.
Long John Silver’s footprint has shrunk
Tony Ellis said SeafoodSource that Long John Silver’s has closed “approximately 110 to 120 locations over the past three years.” He said the company now operates 214 company-owned restaurants and about 262 franchised units, which is in line with the total number of businesses. restaurant search page.
Long John Silver chief marketing officer Laura Ellis said not all of the closings were related to financial performance.
“We want our restaurant experience to be as positive as our food tastes, so we’ve spent a ton of time remodeling our footprint,” she said. “As you can imagine, our brand has been around since 1969, so some of our restaurants have been in dire need of a facelift. This means some of these restaurants are temporarily closed and some are a departure from the historical strategy.”
Tony Ellis explained that the nearly 70 closings come as the chain exits its joint brands of Taco Bell, KFC and A&W, which he said is in line with a “broad industry trend of large chains increasingly favoring individual brands.”
“The company listed liabilities of $457.3 million and assets of $329.1 million in a Chapter 11 filing late Monday in U.S. Bankruptcy Court in Delaware. Tampa Times reported.
This application was filed in 1989 loan funds buyout, which burdened the company with debts.
Why did Long John Silver’s downsize?
QSR Pro posted extensive analysis the fall of Long John Silver in March.
“There is no villain in this story. What’s happening with Long John Silver’s is structural, challenging and instructive for anyone who operates or plans to invest in legacy QSR franchises,” the site said.
QSR Pro noted that food costs created a systemic problem for the chain.
Other restaurants:
“The first problem is food costs. Commodity beef prices are volatile, but seafood is in a completely different category. The supply of wild-caught fish depends on fishing quotas, weather events, changes in ocean temperatures and international trade dynamics,” the report said.
Not being able to switch to chicken or beef at times when fish prices are high also posed unique challenges for the chain.
“McDonald’s can safely change its beef mix if spot prices jump. There is no equivalent move if your entire brand is fish,” the QSR Pro added.
The seafood brand also has a traffic problem.
“Seafood has historically been the most consumed part of the day for dinner, with a secondary spike during Lent. This leaves huge areas for breakfast and lunch as idle, structural waste, which chains like McDonald’s or Taco Bell solve by covering all three parts of the day. Long John Silver’s has never broken down breakfast in big sizes,” the trade publication shared.
Long John Silver’s has revamped some of its restaurants. Shutterstock
Restaurants are struggling widely
“The restaurant space has been tough. There’s a lot of competition, so the market is very saturated,” said Victor Fernandez, CEO of Black Box Insights. Dive Restaurant.
It’s a series of negative headwinds that are simultaneously affecting businesses, Ari Felhandler, an equity analyst who covers Morningstar’s consumer sector, told Restaurant Dive.
“In addition to rising food and labor costs, operators are dealing with higher insurance premiums, further straining their finances,” Felhandler added. “At the same time, the industry remains stubbornly dependent on price increases, further squeezing margins.”
Long John Silver’s is in the middle of a comeback
“The good news is we’re not fighting,” Laura Ellis said SeafoodSource.
She explained that the company had just posted 16 consecutive quarters of comparable sales growth, marking a milestone “that we’re very proud of as a brand.”
Tony Ellis added that the chain’s sales would grow from about $400 million at the end of 2022 to nearly $430 million at the end of 2025.
Four Oaks Partners reportedly acquired Long John Silver’s in 2022 Franchise times.
“Four Oaks Partners is targeting international expansion with a particular focus on the Southeast Asian market. It has been operating continuously in several locations in Singapore since 1983, and in recent years has opened new locations in Thailand, Indonesia and Malaysia,” the report said. Food republic.
Laura Ellis, who spent eight years at Yum Brands, believes the brand also has potential for internal growth.
“Sometimes you work for a brand that’s nostalgic and people say, ‘I used to love it, but I don’t like it anymore.’ When I tell people I work at Long John Silver’s, that’s not the reaction at all. It’s: “I love Long John Silver.” I didn’t know what was next to me,” she told Franchise Times.
“We’re really raising awareness and reminding people that we’re here and opening up new places.”
