The chain restaurant sector has battled an array of economic issues over the last five years that have led to location closings and bankruptcy filings.
Certain fast-food chains, such as Long John Silver’s, have downsized their businesses dating back to the Great Recession in 2008.
More recently, as inflation drove up the costs of labor and food since the Covid-19 pandemic in 2020, menu prices also rose significantly, discouraging diners from eating out.
Rising costs lead to closings
Labor and food costs increased by 35% from 2019 to 2025, according to the Bureau of Labor Statistics, and restaurants often passed the extra costs on to their customers with menu prices rising by an average of 31% from February 2020 to April 2025, the National Restaurant Association reported.
Rising restaurant costs contributed to slower sales, which reached their lowest growth rate since the Great Recession of 2008, not counting the Covid pandemic, according to the 2026 Technomic Top 500 Chain Restaurant Report.
“It was a very, very weak year for the Top 500 overall from a sales perspective,” Joe Pawlak, managing principal at Technomic said, according to Restaurant Business.
Long John Silver’s closes 100s of locations
The challenging restaurant environment has led 57-year-old fast-food dining chain Long John Silver’s to close about 706 restaurant locations nationwide since the Great Recession in 2008.
The seafood fast-food restaurant chain, which launched in Lexington, Ky., in 1969, had 1,081 locations at its peak in 2007, but began its decline the following year, closing 59 locations as the financial crisis began to impact the restaurant sector.
Restaurants filed for Chapter 7 bankruptcy
Some of the restaurant chain victims in the first year of the financial crisis included Starbucks, which closed over 600 locations, according to CBS News, and the owners of the Bennigan’s and Steak & Ale chains, S&A Restaurant Corp., which filed for Chapter 7 bankruptcy liquidation in 2008, Reuters reported at the time.
The Bennigan’s and Steak & Ale chains’ franchisees didn’t file for bankruptcy at the time.
Long John Silver’s continued closing more restaurants in subsequent years, shuttering 33 in 2009, 25 in 2010, 32 in 2011, 21 each year in 2012 and 2013, and then a much larger closing of 75 locations in 2014, ending the year with 815 units, according to QSR Magazine.
Chain has 375 locations after closings
Over the next 10 years, Long John Silver’s closed 330 locations, ending 2024 with 485 restaurants. The fast-food restaurant chain closed another 110 units in the last year and a half, and its website locator lists 375 total stores at last check.
One of the Long John Silver’s franchisees, Uplifted Foods LLC, faced severe financial consequences and was forced to filed for Chapter 7 bankruptcy liquidation about a month after closing its restaurant at the Mall of America in Minneapolis on April 30, according to the Minneapolis/St. Paul Business Journal.
The Eagan, Minn.-based franchisee filed its bankruptcy petition in the U.S. Bankruptcy Court for the District of Minnesota in St. Paul on May 29, listing up to $100,000 in assets and $100,000 to $1 million in liabilities, Bankruptcy Observer confirmed.
Other chains close locations
Other restaurant chains facing economic distress and future closings include Yum Brands’ Pizza Hut chain, which said it would shutter 250 underperforming locations as part of its Hut Forward plan in the first half of 2026.
Papa John’s unveiled in its fourth-quarter earnings call that it will close 300 underperforming restaurants, including 200 by the end of 2026. The company did not reveal a deadline for closing the remaining 100.
Related: Popular seafood chain franchisee files Chapter 7 bankruptcy
This story was originally published by TheStreet on Jun 8, 2026, where it first appeared in the Restaurants section. Add TheStreet as a Preferred Source by clicking here.