Another major burger chain is closing restaurants — but this time the culprit isn’t soaring beef prices or the broader fast-food slump.
Hardee’s, the Tennessee-based chain known for its Southern-style biscuits and burgers, is shutting 77 restaurants across the country after one of its largest operators allegedly stopped paying its bills.
Last month, the burger company filed a lawsuit against ARC Burger — a company backed by High Bluff Capital Partners — accusing it of owing $6.5million in royalties and rent.
After the lawsuit was filed, ARC Burger closed the Hardee’s locations it owns across eight states: Alabama, Florida, Georgia, Illinois, Missouri, Montana, South Carolina and Wyoming.
Hardee’s blamed ARC Burger for failing to pay what it owed ‘despite solid sales and our continued attempts over the course of many months to reach a resolution that would keep these restaurants open,’ the company said in a statement to USA Today.
This isn’t the first time Hardee’s has clashed with a major franchise operator this year.
The chain is also locked in a legal battle with Paradigm Investment Group — which runs restaurants across Tennessee, Alabama, Mississippi and Florida — over claims the operator refuses to accept digital orders or stay open past 2pm.
Hardee’s, which has 1,800 restaurants in the US, has struggled for years, amid a sales slump, restaurant closures and franchisee bankruptcies.
Hardee’s, the 1,800-store Southern comfort food chain, is closing 77 restaurants because of a lawsuit with a franchisee
A Hardee’s restaurant is pictured. The chain is shutting 77 locations nationwide after a major franchise operator allegedly stopped paying its bills.
Hardee’s, the 10th largest fast-food burger chain in the US in terms of total sales, didn’t immediately respond to the Daily Mail’s request for comment.
The closures come as several other massive burger chains shut stores amid surges in beef prices and a downturn in customer traffic.
Jack In The Box, the California-based burger and taco chain with 2,168 restaurants, is closing between 80 and 120 storefronts by December 31.
So far, it’s only closed 72.
Wendy’s, long the nation’s third-largest burger chain, is also rolling out a turnaround dubbed Project Fresh — a plan that includes closing 300 weaker restaurants.
‘Fast food has moved from being an inexpensive indulgence to an expensive option,’ Neil Saunders, managing director at GlobalData, previously told the Daily Mail. ‘So a lot of consumers are cutting back.’
Sticker shock has upended one of the fast-food industry’s oldest dynamics — when grocery prices soar, drive-thru traffic typically climbs. Not this time.
Part of the problem for the burger chains has been food prices. Last month, ground beef prices spiked a shocking 14.9 percent, while beef roast prices have jumped 21.2 percent.
That’s made it more expensive for restaurants to cook a burger.
Fast food chains have had to increase prices because of food inflation: ‘Fast food has moved from being an inexpensive indulgence to an expensive option,’ an independent analyst told the Daily Mail
A Hardee’s burger is seen above — but diners in eight states are losing access as the chain closes 77 restaurants tied to a franchise dispute.
Meanwhile, American shoppers are cutting back on their restaurant spending after 56 straight months of rising prices.
That’s even started to hurt for chains that don’t focus on beef.
Sweetgreen’s growth has halted, Chipotle is saying its customers are no longer lining up out the door, and Starbucks is struggling to turn around several quarters of sales declines, forcing the cafe chain to close hundreds of US stores.
Struggles at Denny’s and Pizza Hut forced their owners to sell both brands.
Meanwhile, those that have cut prices are thriving.
Chili’s has staged a significant comeback on budget meal deals, while McDonald’s has announced two straight quarters of growth on the back of promotions.
[H/T Daily Mail]
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