Some restaurant chains work in their home markets, but struggle to expand nationally.
“Not every restaurant expansion story is successful. Some restaurant operators struggle moving outside their region, like Jack in the Box. Others fail because they become too aggressive and try to expand too quickly, taking on debt, like Krispy Kreme,” wrote The Motley Fool’s Geoffrey Seiler.
Some restaurant chains have struggled given the challenging economy, and even the winners have been scrambling to find ways to please the market.
“I think the common thread behind everything right now is that the chains that are winning aren’t standing still. They’re doing something innovative, whether that’s new menu items…maybe that’s a marketing innovation…maybe it’s just hyper-emphasizing value,” RJ Hottovy, head of analytical research for Placer.ai, told CNBC.
Some chains, including Primanti Bros., a sandwich chain famous for putting fries on its sandwiches, have been forced to retrench. That means closing stores and pulling out of certain markets.
Primanti Bros. closes stores
A chain with deep roots in Pennsylvania, Primanti Bros. has a national profile after being featured on Guy Fieri’s “Diners, Drive-Ins, and Dives” on the Food Network.
The sandwich shop has a simple concept, according to former CEO Adam Golomb.
“The hero item is this sandwich which is your choice of deli meat that’s heated up on the grill with cheese, topped with coleslaw, French fries, and tomatoes and then put between fresh-baked Italian bread that we use local bakeries to bake for us. The coleslaw is made fresh to order. We hand cut potatoes for French fries. We slice the meat daily. There’s also pizza, wings, salads, burgers, and other sandwiches and appetizers and dessert,” he said.
That has mostly been a successful recipe, but the chain has closed a number of restaurants in recent years. Two locations near Pittsburgh, for example, closed on April 5.
Primanti Bros. faces challenging operating environment
Primanti Bros,. has fallen victim to rising costs, higher rents and labor prices, and a broad consumer pullback across the restaurant industry.
“Led by food and labor, restaurant operating costs are 30% ahead of 2019 levels. While operators have increased menu prices in kind — 31 percent since 2020 — it’s fallen short of the need. Indeed, operators can expect dining-out inflation in the three- to four-percent range this year. Profit margins are tight, averaging three to five percent,” according to Modern Restaurant Management.
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It’s a challenging environment, but not an impossible one, according to the National Restaurant Association (NRA).
“Consumer demand remains solid, but their spending power is restrained. Consumers have strong pent-up demand for restaurant experiences. More than 7 in 10 consumers say they would use restaurants more frequently if they had more disposable income,” the NRA reported in a press release.
Why is Primanti Bros. closing?
Primanti Bros. has closed a number of locations over the past few years, including, most recently, its Monroeville and North Versailles restaurants in the Pittsburgh area.
“Sometimes the consumer demand changes, and the market changes from area to area, so we just felt it was the right time for that. It was not a decision that we took lightly,” CEO Gerald Pulsinelli told ABC 4 WTAE.
The reason for the closures was simple.
“We certainly saw some traffic decline in both those locations over the past couple years,” he added.
These are the latest Primanti Bros. closures in western Pennsylvania, following last year’s closure of the Penn Avenue in Pittsburgh’s Garfield neighborhood, according to the local news site. Earlier this year, the Camp Hill and Lancaster locations in south central Pennsylvania were closed.
The chain has shared that it does not have any more closures planned.
Primanti Bros. shows 20 remaining locations on its website, down from more than 40 before the Covid pandemic.
Shutterstock
Quick facts on Primanti Bros. closures
Primanti Bros. shared a statement in February when it closed three locations.
“This is not a decision we take lightly. While we are adjusting our overall footprint to best meet demand, our commitment to both loyal customers in these areas and the iconic sandwiches we’ve been serving for almost a century remain unchanged. We will continue to operate nearby restaurants in both markets,” the restaurant said in a statement sent to Channel 11.
- Florida pullback: The chain closed its Orlando-area location (Altamonte Springs) in 2024, struggling to sustain momentum outside its core markets, according to BizJournals.com.
- Maryland exit hits suburbs: A Primanti Bros. in Hagerstown, Md., shut down, part of a trend of trimming weaker, non-core locations, reported Herald Mail Media.
- Western PA closures: Even in its home region, underperforming restaurants in western Pennsylvania have closed or relocated in the past two years, according to Trib Live.
- Impact ofmall traffic decline: Some closures were tied to struggling mall locations where foot traffic hasn’t recovered post-pandemic, reported The Pittsburgh Post Gazette.
- Strategic retreat, not collapse: The company is pruning weaker stores while keeping its core footprint intact, not signaling a bankruptcy-level crisis, according to Nation’s Restaurant News.
- Industry-wide pressure: The moves mirror broader trends with rising costs, uneven traffic, and shifting dining habits, forcing regional chains to shrink before growing again, added Restaurant Business.
The chain also shared a statement after it closed a location in August.
“Through the normal course of business, we continually evaluate our portfolio to ensure our restaurants have the resources to achieve their growth potential. Based on our lease agreement, and after careful consideration, we made the decision not to renew the lease and instead focus on our efforts towards the restaurant in Suncrest Towne Center,” WDTV reported.
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