Popeyes, Denny’s and Applebee’s are each in the midst of their own brick-and-mortar refreshes, and they each have reason to hope their investments pay off. Each one has struggled to jolt its business in an industry where sales started the year flat before dipping to a seven-month low in February. Visits to quick-service restaurants fell 1.6% in the first quarter from the same period a year ago, according to foot traffic data from Placer.ai, while fast-casual visits were flat.
With few exceptions — Chili’s and Taco Bell among them — major operators are in an uphill fight to keep customers ordering. Spending on food services and accommodations, which includes restaurant meals, shrank by $15 billion in February, according to federal data. Restaurant bankruptcy filings last year hit their highest level since 2020 as store closure announcements piled up.
Just weeks ago, several large restaurant brands were forecasting sales to accelerate after a slow first quarter. But the Trump administration’s massive new tariffs — despite its recent 90-day pullback of many of them — threaten that outlook with cost increases for everything from lumber to avocados. The National Restaurant Association has warned that “applying new tariffs at this scale will create change and disruption that restaurant operators will have to navigate” to keep their doors open.
“It’s a tough time” for restaurants to invest in refreshing their locations, said Eric Gonzalez, an analyst at KeyBanc Capital Markets who follows the sector.
Daily expenses have swelled, with food costs rising 40% over the past five years and industry wages up 35%, according to NRA estimates. But Gonzalez said many operators don’t have much choice: “If you don’t keep your system modernized, you kind of die on the vine.”
While many consumers renovated their homes during the pandemic, restaurants were grappling with bigger real-estate concerns than wall colors and seating designs. Many locations were closed due to shutdown orders, understaffed, under-visited, converted into food-delivery prep kitchens or some combination of all four. Now operators feel they’re overdue for a refresh, said Jonathan Maze, editor-in-chief of Restaurant Business magazine.
“These brands need revitalizing, so you get executives that really pushed the remodels,” he said.
The efforts include standard-fare upgrades like revamped exteriors and fresh color palettes along with newer digital features.
Chuck E. Cheese has been busy adding programmable displays whose content can be refreshed continuously, ensuring guests find something new with each visit. Like other fast-food chains, Burger King is leaning into self-ordering kiosks and looking for tech-driven ways to enhance its drive-thru capacity; some locations are even experimenting with artificial intelligence for taking customers’ orders. Popeyes said its refreshes include new tech and equipment upgrades “to improve team efficiency, order accuracy and guest experience.”
For all the newfangled additions, experts say brick-and-mortar overhauls are a well-worn strategy to re-energize fatigued customers.
“Restaurants get dated,” Maze said. “Any chain that’s been around for any period of time needs to spruce things up.”
Taco Bell was known in the 1990s for its teal-and-salmon decor, with furniture bolted to the floor tiles. Wendy’s locations were once blanketed in maroon carpeting and featured self-service salad bars. Fast-food aesthetics around the turn of the millennium skewed kooky and colorful, but times have changed. Modern hardwood finishes and a sleeker minimalism tend to prevail today, a look that has sometimes drawn criticism as being too grown-up or just plain boring.
But operators say there are early signs that their refreshes are working. The sites where Denny’s has been testing its latest updates, to the tune of about $250,000 per location, have seen traffic and sales each rise more than 6%, according to Chief Operating Officer Chris Bode.
“At the end of the day, we want to continue to evolve our iconic brand into what is important to today’s guest,” he said in a statement.
Gonzalez said past remodeling pushes — or a lack thereof — have had lasting impacts on how consumers see major restaurant brands. When millennials were kids, many fast-food chains looked dated and uninviting, opening the door for fast-casual rivals like Chipotle, Panera and Smashburger to pick up younger diners. Many Gen Zers, on the other hand, have only known spiffed-up McDonald’s and tend to view that and rival brands more positively, he said.
“Remodeling helped with that,” Gonzalez said.
Revamps aren’t just about boosting vibes, though. In a climate where many businesses are grappling with inflation, global economic uncertainty and sour consumer outlooks, upgrades can also help save operators money.
Tech-fueled updates are often aimed at boosting staffers’ efficiency in kitchens and drive-thrus. Some recent changes, like self-ordering kiosks, reduce the need for employees to take orders at counters. During Wendy’s latest investor day, CFO Ken Cook said he expected new technology to improve labor productivity and help boost restaurant margins by 2% over the next three years.
As customers become more value-conscious, restaurants need to do the same, said Chad Moutray, vice president of research and knowledge at the National Restaurant Association.
“They need to find ways to cut costs wherever they can,” he said.
