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Read This: There are too many good restaurants

Photo: Kevork Djansezian/Getty Images

We’re living in what some might call a “restaurant renaissance,” one in which organic, locally sourced ingredients abound at an ever-increasing range of fast, creative dining concepts. Celebrity chefs are all over TV, and neat restaurants are opening in cities both big and small. There’s truly no shortage of options, whether you’re looking for breakfast, lunch, or dinner. And yet, something’s wrong.

“The Paradox Of American Restaurants,” a new piece from The Atlantic, affirms that while, yes, there is a restaurant renaissance happening in the United States, it coexists alongside a restaurant recession. Here’s how writer Derek Thompson characterizes the industry’s view of the modern restaurant scene:

Last year was “the worst restaurant year since the recession,” according to QSR Magazine. Dinner “traffic,” the industry term for the number of walk-in customers, has been falling for five straight years, says market-research firm NPD Group Inc. The lunch business is in a veritable depression. Last year saw the lowest level of lunchtime traffic in four decades, according to The Wall Street Journal, which declared “lunchtime is over for the restaurant industry.” The National Restaurant Association’s top trend for 2017? “A challenging business environment.”


After speaking to a number of restauranteurs, Thompson has a number of theories that help explain this paradox. His most striking takeaway, however, is also the most obvious one: There are simply too many restaurants. This goes double for the “fast casual” sector popularized by the likes of Chipotle and Sweetgreen.

Fast casual is on fire, with total locations soaring 9 percent last year. But the category is adding new spots so quickly that same-store sales are falling more than 2 percent annually. Hungry urban consumers watch lunch spots popping up across their city, and praise new options, across-the-board quality, and a dynamic restaurant scene. But to a fast-casual franchise, “new options, dynamic restaurant scene, and across-the-board quality” are terrifying euphemisms for cut-throat competition, high churn, and wobbly same-store sales.

Because of this, restauranteurs have become overly reliant on sites like Yelp to legitimize them. Even an average rating can doom your restaurant to evening after evening of empty tables. Thompson compares this era in restaurants to the modern television landscape:

In this way, the golden age of restaurants is a bit like today’s golden age of TV. For television viewers, there have never been more options or, perhaps, better quality programming. But as the number of original scripted shows has soared, so has the failure rate. A new drama is now four to five times more likely to be cancelled today than it was in the late 1990s.


The same goes for restaurants. Look up that cute place you went to dinner at six months ago, never to return due to an abundance of other options, and you’ll probably find that it’s now closed. Restaurant closings barely make news anymore, what with so many new ones popping up in their wake.

If this is all depressing, here’s some good news: Denny’s is thriving.


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