Former CKE Restaurants CEO Andy Puzder has predicted that the restaurant industry will see more closures in the near future, as their customers “just can’t afford” modern prices.
Inflation and its impacts on the restaurant industry have become a growing concern in recent years, as Red Lobster just announced earlier this month that it is filing for bankruptcy. Puzder, who once was in charge of the parent company of Hardee’s and Carl’s Jr., explained that he believes more restaurant closures are on the way, partly due to rising employment costs.
“Middle-performing restaurants are going to go away,” Puzder said on Fox Business’s Varney & Company. “Very good-performing restaurants will become midland or low-performing restaurants. As more restaurants close, there’ll be more customers for fewer restaurants. But people just can’t afford these prices. And there’s only so much you can do to reduce prices.”
Puzder specifically noted how restaurants in California could have a hard time staying profitable, as one restaurant CEO he spoke to told him he plans to have employees outside the state take orders from drive-thru customers to keep employment costs down. The Golden State’s minimum wage is $16 an hour and is set to increase to between $18 and $23, depending on the job and healthcare provider.
After filing for bankruptcy, Red Lobster issued a statement clarifying what the term bankruptcy means, adding that it does not mean it is going out of business and is instead planning to “write a new chapter” going forward. Court filings revealed that the company has more than $1 billion in debt, compared to the $30 million in cash on hand.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Various fast-food chains have introduced deals in an attempt to woo back once-loyal customers who have stopped visiting due to the increased prices of meal items. Pizza Hut, for instance, is offering customers a choice of several personal pizza options with a side and a drink for $6.99.
Next month, McDonald’s is introducing a $5 meal deal, which will give customers a choice between a McDouble cheeseburger or a McChicken sandwich paired with a side of fries, chicken nuggets, and a soda. This offer, however, will only be available for one month, starting June 25.
