O’Charley’s, a well-known casual dining chain, recently made a significant move by closing 18 of its locations in a single day.
This decision came as a response to various challenges the chain has faced, including declining sales and changing trade areas.
The closures are part of a broader trend for O’Charley’s, which has seen the company shutter a total of 51 restaurants in 2023, marking more than a third of its total unit count.
Several factors contributed to these closures. The chain’s sales have been on a downward trajectory, decreasing by 34% from 2017 to 2022.
Changing consumer habits, such as the shift to online shopping during the COVID-19 pandemic, have impacted foot traffic in the areas around many O’Charley’s locations.
Additionally, increased rent and commodity costs have put further financial strain on the chain.
O’Charley’s CEO Craig Barber described the closures as a necessary step for the long-term health of the brand, likening it to “pruning the vines at a winery.”
He emphasized that while it was a difficult decision, it was crucial for preserving cash flow and enabling a fresh start with a more asset-light portfolio.
The company is making efforts to improve cash flow and sales margins, with strategies including being smart about pricing and discounting. For instance, the reintroduction of the “Free Pie Wednesday” promotion now requires the purchase of an adult-sized entrée.
The closures have reportedly affected O’Charley’s restaurants in various states, including Ohio, Kentucky, and Indiana, reducing the chain’s total number of operating restaurants to 91.
Despite these challenges, the company remains hopeful that these changes will strengthen the overall health of the chain and potentially set the stage for future growth.