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Why fast food bankruptcies are suddenly surging nationwide

So far, 2026 is on track to match and potentially exceed the peak fast food restaurant bankruptcies in 2024. ©Image Credit: Unsplash / Tim Mossholder

If it feels like you've got fewer fast food restaurants to choose from lately, you aren't wrong. This year hasn't been kind to fast food restaurants, as data shows a surge in bankruptcies among them, with several factors to blame.

Even the big chains are feeling the pain

It's not just small mom-and-pop restaurants feeling the pinch; bankruptcies have increased among big chains, too. A trend is emerging, and it's not a positive one.

This year alone, several hundred locations closed across chains like Applebee's, Hardee's, Carl's Jr., Popeyes, Subway, and Moe's Southwest Grill.

It seems like no chain is immune in 2026. 2024 was previously considered the peak year for restaurant bankruptcies. The year 2025 broke the record of 2024 closures with 20 major restaurants shutting down. Reports indicate this year is on pace to at least match or exceed 2025.

The perfect storm of reasons

Looking closely at the situation, it's not just one reason but a perfect storm of factors that have combined in 2026. Things like inflationary pressures, high labor costs, high food costs, changing consumer/diner habits, and slumping foot traffic.

What's really interesting is the restaurants with the lowest price points seem to be the ones struggling the most right now.

There's been a trend to pick higher-end fast casual restaurants that focus on good quality ingredients and healthier options, according to Oren Bitan, co-chair of law firm Buchalter's fiduciaries, receivers, and trustees practice group.

“Costs are up, demand is down. Not a great place to be,” said Bitan.

Some may use it as a consolidation strategy

When a restaurant files for Chapter 11 bankruptcy, it doesn't necessarily mean they are closing all locations. For some restaurants, it can be a consolidation strategy.

With interest rates still high, softer sales have become unsustainable.

Show your favorites some love

This could be a great time to show your favorite fast-food spots some love and show your support with your wallet.

Source: Restaurant Dive

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