Full-service restaurants are bearing the brunt of a widening industry shakeout, with new data from Black Box Intelligence (BBI) indicating that 9% of full-service units are at risk of shuttering this year. Across the broader restaurant industry, BBI estimates that between 10% and 15% of operators are vulnerable, while 85% to 90% of the sector remains resilient.
The risk threshold used by BBI is clear: any restaurant that lost 30% or more of its peak sales in 2025 is considered at risk for closure. For the 3% of full-service restaurants that saw sales fall by more than 50%, the question, according to BBI vice president of insights and knowledge Victor Fernandez, is no longer whether they will close, but when.
Casual dining has been the most visibly affected segment. Net unit growth in full-service restaurants has declined by more than 3% since 2022, with closures continuing to outpace openings. Red Robin, Denny’s and Red Lobster are among the chains that have reduced or flagged location counts in recent months. Meanwhile, limited-service restaurants are holding steadier, with only 4% at risk. Quick-service and fast-casual segments have seen net unit growth of 5.8% and 15.5%, respectively, since 2022.
The data points to a structural reality shaped by years of compounding cost pressure. As Fernandez noted, cumulative inflation has driven operating costs up by nearly a third since 2019, making it nearly impossible for a unit to remain viable once sales erosion reaches that 30% threshold.
That said, closures are not necessarily a signal of systemic failure. BBI notes that consumer demand does not simply disappear when a location shuts down. Instead, it shifts to nearby operators that offer consistent value and execution. For brands willing to shed underperforming units, a leaner portfolio can redirect capital and management focus toward higher-growth locations, a strategy already being pursued by chains including First Watch and Dine Brands, both of which are targeting second-generation spaces to reduce opening costs.
The data arrives as several limited-service chains, including Papa Johns, Pizza Hut, Wendy’s and Jack in the Box, have already announced plans to close hundreds of underperforming locations, indicating that the pressure is not limited to full-service operations alone.
