Popeyez, Denny and Appleby are all in the middle of their own brick and mortar updates, and each has reason to hope that their investment will pay off. Each has struggled to shake up their business in an industry where sales have been set for a year before immersing themselves in the seven-month low in February. According to transportation data from Placer.ai, visits to quick service restaurants fell 1.6% in the first quarter from the same period a year ago, while high-speed visits were flat.
A few exceptions – in the Chilean and Octopus Bells – the major operators are in a difficult battle to keep customers ordering. Federal government data shows spending on foodservice and accommodation, including restaurant meals, shrunk by $15 billion in February. Last year’s restaurant bankruptcy filing reached its highest level since 2020, as store closures were piled up.
Just a few weeks ago, some large restaurant brands had forecast sales to accelerate after the first quarter was slow. But the Trump administration’s massive new tariffs threaten that outlook with rising costs for everything from wood to avocado, despite a 90-day pullback for many recently. The National Restaurant Association warns that “applying new tariffs at this scale will create changes and disruptions that restaurant operators have to navigate.”
The restaurant is “struggling” to invest in refreshing its place, says Eric Gonzalez, an analyst at KeyBanc Capital Markets, which follows the sector.
According to NRA estimates, daily costs have risen, with food costs rising by 40% over the past five years and industry wages rising by 35%. But Gonzalez said many operators don’t have many options: “If you don’t modernize your system, you’ll die on a vine.”
While many consumers renovated their homes during the pandemic, the restaurant was tackling real estate concerns larger than wall colours and seating designs. Many locations were closed due to shutdown orders and converted to shortages, shortages of visits, food delivery preparation kitchen or a combination of all four. Jonathan Mays, editor-in-chief of Restaurant Business Magazine, now feels that he is being postponed for refreshment.
“These brands need revitalization, so you get executives who really pushed mods,” he said.
The initiative includes standard upgrades such as improved exteriors and fresh colour palettes, as well as new digital features.
Chuck E. Cheese is busy adding programmable displays that allow you to continuously refresh your content, and you can find something new with each visit. Like other fast food chains, Burger King leaned over a self-ordered kiosk, looking for a technology-driven way to enhance drive-through capacity. Some locations experiment with artificial intelligence to take customer orders. Popeyes said the refresh includes new high-tech and equipment upgrades, which will “improve team efficiency, order accuracy and guest experience.”
With all new additions, experts say brick and mortar overhauls is a worn-out strategy to revitalize fatigued customers.
“Restaurants will be outdated,” the maze said. “A chain that has always been there needs to get things right.”
Taco Bell is known for its Teal and Salmon decorations in the 1990s, with furniture fixed to floor tiles. Wendy’s location was once covered in maroon carpet and featured a self-service salad bar. The fast food aesthetic around the turn of the millennium is strange and colorfully distorted, but times have changed. Modern hardwood finishes and refined minimalism tend to be prioritized today. This has sometimes attracted criticism as being too grown or just boring.
However, operators say there are early signs that the refresh is working. The site where Denny is testing the latest updates is adjusting about $250,000 per location, with traffic and sales increasing by more than 6% each, according to Chief Operating Officer Chris Bord.
“At the end, we want to continue evolving our iconic brand into something important to our guests today,” he said in a statement.
Gonzalez said the push, or lack of past modifications, has had a lasting impact on how consumers view major restaurant brands. When millennials were kids, many fast food chains seemed outdated and unattractive, opening the doors of fast rivals like Chipotle, Panera and Smash Burger to pick up young diners. On the other hand, he said many Gen Zers were just rippling by McDonald’s, and they tend to see it and look more aggressively at rival brands.
“The modifications helped,” Gonzalez said.
However, renewals do not only boost the atmosphere. In a climate where many companies are tackling inflation, global economic uncertainty and sour consumer outlook, upgrades can also help operators save money.
High-tech fuel updates are often aimed at increasing efficiency for kitchen and drive-thru staff. Several recent changes, such as self-order kiosks, have reduced the need for employees to take orders at the counter. During the day, Wendy’s latest investor, CFO Kencook said he expects new technology to help improve labor productivity and increase restaurant margins by 2% over the next three years.
As customers become more valuable, restaurants need to do the same, said Chad Mautley, vice president of research and knowledge at the National Restaurant Association.
“They need to find ways to cut costs everywhere,” he said.