The restaurant world has been riding some rough waves for years, facing more challenges than its retail cousins. Then 2020 hit and made everything even tougher, shifting how places do their thing. Grasping these issues matters for business owners, employees, and the folks who love to eat out.
Running a restaurant: hurdles you face
Running a restaurant has always been no walk in the park. Unlike many retail businesses that easily moved online, restaurants count on in-person dining (the bread and butter of their earnings). Things got even messier when nearly all in-person spots had to close their doors at the start of 2020 because of the pandemic. The American Bankruptcy Institute reported that around 60% of the businesses that shuttered then never reopened, really showing just how tough it became.
Even with efforts to switch gears, many spots had a hard time rolling out takeout services on the fly. This change was clunky and often didn’t bring in enough profit, especially for newer or already struggling joints. Even when times are good, getting customers to choose takeout isn’t always a breeze.
Money struggles and why restaurants fold
Getting a restaurant off the ground and keeping it running comes with a hefty price tag. From splurging on prime, busy locations to buying materials, equipment, and handling renovations, the costs can skyrocket. Once the doors are open, recurring expenses like steep rents, utilities, food costs (which can go to waste quickly), and labor can really eat away at any profit.
These financial strains have led to a high rate of closures in the industry. Stats show that about 20% of restaurants shut down in their first year, and that number jumps to roughly 50% after five years. These figures highlight just how unpredictable the business can be.
Looking at fernando’s mexican cuisine
A clear example of these challenges is Fernando’s Mexican Cuisine, a high-end Texan chain famous for its nachos, fajitas, and margaritas. After more than 20 wonderful years serving the Dallas area, Fernando’s announced it would close both of its locations on May 18, 2025. This decision came after lease talks fell through at their Dallas spot and leases ended at their Richardson site (meaning they couldn’t secure agreements to keep going).
The managing partner shared that it was with “extraordinary sadness” that they had to call it quits. This feeling not only shows personal heartache but also mirrors the struggles that many similar establishments across the country are facing.
Looking at restaurant adaptation strategies
Unlike retailers that could shift online during the pandemic, restaurants really had limited ways to pivot. Some popular spots managed to stay afloat by nailing takeout, but others—especially those that were already in a rough spot—struggled to pull in customers with that model. This goes to show that even with creative moves like takeout or delivery, a restaurant’s success often hinges on having a loyal customer base and a recognizable brand.
The ongoing hurdles mean these places need to come up with new plans and learn to change things up (which keeps our local dining scene lively). As folks continue backing local businesses, getting recovery efforts underway isn’t just good for business—it helps keep our communities buzzing with a variety of dining options.
At the end of the day, really understanding all these ins and outs lets everyone—from lawmakers putting together supportive policies to regular diners picking their favorite spots—play a part in shaping the future of the restaurant scene and keeping it strong for the long haul (even when bumps in the road come our way).
