The restaurant industry has been grappling with several challenges in recent years. Rising food costs have intensified pressure on establishments, squeezing their already narrow profit margins.
Additionally, increased labor costs have posed another significant challenge. In 2024, 25 states implemented minimum wage hikes, compelling restaurants to adjust their wage structures accordingly.
The convergence of higher operational costs and evolving consumer behavior has adversely affected numerous well-known chains. Financial strain among consumers has led to reduced spending on dining out.
A 2024 survey by Swiftly revealed that 70% of Americans were struggling to afford groceries. For many, dining out becomes a luxury that must be sacrificed when budgeting becomes tight.
Over the past year, restaurant prices have climbed at a faster pace than grocery prices. According to the Consumer Price Index, restaurant prices increased 3.7% on an annual basis in February, compared to a 1.9% annual increase for grocery prices.
Casual dining chains have been significantly impacted by these economic conditions, with several being forced to file for bankruptcy. Red Lobster sought Chapter 11 protection in May 2024, citing financial and operational difficulties. TGI Fridays also filed for bankruptcy in November 2024, stating challenges that persisted since the pandemic.
Several well-known Mexican casual dining chains have either filed for bankruptcy or announced closures. Rubio’s Coastal Grill filed for Chapter 11 in mid-2024 to restructure its debt and close 48 locations in California. On The Border Mexican Grill & Cantina filed for bankruptcy in March 2025 after shutting down 40 locations.
In response to these challenges, some restaurants have revamped their menus post-bankruptcy to attract new patrons and retain existing ones. Tijuana Flats, for instance, introduced a major menu overhaul to incorporate more authentic flavors and expand its beverage options.
Menu changes also serve as a prudent strategy for restaurants not facing immediate financial distress but seeking to bolster their financial performance amid decreased consumer spending and less frequent dining out.
The Cheesecake Factory, known for its extensive menu, acknowledges the need for continuous innovation to stay competitive. The restaurant conducts menu overhauls twice a year, removing underperforming items while introducing new offerings. Upcoming eliminations include items such as the Everything Flatbread Pizza and the Mushroom Burger, among others.
However, the restaurant is also introducing 22 new items, including Chicken Shawarma, Double Smash Cheeseburger, and Spicy Ginger Beef Tenderloin. New beverages like Margarita Verde and Japanese Whisky Sour are being added, alongside a children’s dessert, strawberry shortcake.
CEO David Overton emphasized the brand’s commitment to offering diverse menu options that customers desire. The updated menu spans various price points, catering to consumers’ cautious spending habits, with appetizers starting at $12.95 and steak dishes priced at $31.
