Restaurant Industry’s Winners and Losers of 2024: From Chili’s to Fast Food Chains
In 2024, consumers tightened their wallets, leading to a significant decline in restaurant visits. This shift heightened competition among eateries, with many battling for a dwindling customer base. The year saw notable bankruptcies, including well-known names like Red Lobster and TGI Fridays, but it also showcased winners like Chili’s, Cava, and Wingstop, which capitalized on strategic marketing and value-driven innovations.
Here’s a closer look at how the restaurant industry fared in 2024 and which chains emerged as the winners and losers.
Consumers Shift to Budget-Friendly Options
Jennifer Jennings, a sales professional in Tulsa, Oklahoma, summed up the sentiment of many Americans: “I’ve been eating out less this year—it tastes just as good, and it’s way cheaper.”
This year, restaurant prices rose 3.6% year-over-year, while grocery prices increased by just 1.6%, according to the Labor Department. As a result, more consumers opted to cook at home, reducing restaurant spending. This shift forced many restaurant chains to innovate and launch value-focused promotions to retain traffic.
Bankruptcy Filings Highlight Industry Struggles
The industry witnessed 26 Chapter 11 bankruptcy filings in 2024, nearly triple the number seen during the pandemic in 2020. Red Lobster and TGI Fridays were among the most prominent casualties. Analysts cited waning traffic, rising costs, and ineffective marketing as contributing factors.
While some chains exited bankruptcy with new strategies, the sheer volume of closures underscored the ongoing challenges facing the restaurant sector.
The Value Wars: Winners and Losers
Winner: Value-Driven Chains
Chains that emphasized value outperformed their competitors. McDonald’s, for example, responded to declining foot traffic by introducing a $5 combo meal, setting off a wave of similar deals from rivals. According to Circana, value menu deals drove a 9% increase in traffic through October compared to last year.
However, industry experts cautioned that offering discounts isn’t enough. Consumers now define “value” as a combination of affordability, quality, and experience.
Loser: Fast Food Chains
Despite offering discounts, fast food chains struggled. Quick-service restaurant traffic dropped 2% through October, primarily due to lower-income diners cutting back. Chains like McDonald’s and Taco Bell, which rely on these consumers, faced significant challenges.
Even traditionally resilient fast-food chains like Burger King and Wendy’s grappled with declining traffic, despite efforts to boost sales through promotional offers and menu changes.
Chicken Chains Dominate
Winner: Chicken-Focused Restaurants
Chicken-centric chains like Chick-fil-A, Raising Cane’s, and Wingstop thrived in 2024. Stable poultry prices and a growing perception of chicken as a healthier alternative to red meat helped these brands gain market share.
McDonald’s even leaned into the trend by adding the Chicken Big Mac to its menu permanently, while Raising Cane’s cemented its position as a major player in the U.S. chicken market.
In contrast, KFC, owned by Yum Brands, struggled to compete. Rivals like Popeyes and Chick-fil-A outperformed KFC by consistently introducing buzzworthy menu items that resonated with consumers.
Loser: Burger Chains
The popularity of chicken directly impacted burger chains. McDonald’s, Wendy’s, and Burger King all faced a challenging year. An E. Coli outbreak linked to McDonald’s Quarter Pounders further dented consumer confidence, although the company worked quickly to recover.
The Rise of Fast-Casual Restaurants
Winner: Fast-Casual Chains
Fast-casual restaurants like Cava, Wingstop, and Chipotle continued to gain traction, with traffic rising 3% through October. Cava’s stock surged 192% in 2024, while Wingstop reported quarterly sales growth exceeding 20% for each quarter.
These chains benefited from their higher-income customer base, which has been less impacted by inflation. Moreover, fast-casual dining struck the right balance of quality, price, and convenience for many consumers.
Loser: Casual Dining
Traffic to casual-dining chains fell by 2% year-to-date through October. Brands like Red Lobster and TGI Fridays struggled to remain relevant, with both filing for bankruptcy.
However, chains like Chili’s and Olive Garden bucked the trend by offering value-driven promotions. Chili’s “3 for Me” bundle became a standout success, while its Triple Dipper appetizer combo went viral on TikTok, contributing to a 14.1% same-store sales growth in its latest quarter.
Taco Bell’s Winning Strategy
Taco Bell emerged as a rare fast-food success story. As part of Yum Brands, Taco Bell achieved same-store sales growth every quarter in 2024. Consumers praised the chain for its affordability and innovative menu items, such as the return of its Mexican Pizza.
Taco Bell also experimented with AI-driven technology and introduced new concepts like the Live Mas Café, solidifying its position as a fast-food leader.
