Restaurants often close down, with about 30% shutting within the first few years. Even big chains that grow quickly can struggle to stay popular and competitive.
Many successful American restaurant chains have failed over the years, showing that no brand is immune to failure. From steakhouse staples to fast-food pioneers, these chains met their unfortunate demise due to market pressures, competition, and internal mismanagement.
Here are six major American restaurant chains that failed miserably and what led to their downfall.
Restaurant Chains That Failed
1. Chi-Chi’s: A Tex-Mex Giant Crushed by a Health Crisis
Chi-Chi’s was a well-liked Tex-Mex restaurant that opened in 1975. They were famous for their fried foods like chimichangas & had 210 restaurants in the US by the 1990s. However, they had a hard time competing with other Tex-Mex restaurants like Taco Bell & On the Border.
What truly sealed Chi-Chi’s fate was a major health crisis. In 2003, the chain was involved in a hepatitis A outbreak that sickened more than 600 people and resulted in several deaths.
Paired with declining popularity and a Chapter 11 bankruptcy filing that same year, Chi-Chi’s closed its remaining U.S. locations. However, its brand survives through salsa products that are still available on supermarket shelves.
2. Mr. Steak: A Failed Shift Away from Its Core Concept
Mr. Steak started in the 1960s as a cheap steakhouse chain in Colorado. It became famous for its slogan, “America’s Steak Expert,” and was very popular in the 1970s, with over 270 restaurants. People liked Mr. Steak because they could get steak dinners for very cheap prices, like T-bone steaks for as little as $2.99.
But in the 1980s, the chain started serving chicken, fish, and other foods that were not steak, which made customers less interested. This change caused Mr. Steak to go out of business in 1987, and the last restaurant closed in 2009.
3. Howard Johnson’s: A Legacy That Faded Away
Howard Johnson’s, often referred to as “HoJo’s,” was once America’s largest restaurant chain, with more than 1,000 locations nationwide during its heyday in the ’60s and ’70s. Known for its fried clams, signature hot dogs & 28 flavors of ice cream, the chain was a pioneer in the restaurant industry, serving millions of families on the road.
But, McDonald’s and KFC became more popular and people liked different foods, so Howard Johnson’s went down. It was sold to Marriott in the 1980s and fewer restaurants were left. The last one in Lake George, New York closed in 2022, ending an old time.
4. Red Barn: A Forgotten Fast-Food Pioneer
Founded in 1961 in Springfield, Ohio, Red Barn was a fast-food chain that offered unique items like the Big Barney and Barnbuster burgers—predating McDonald’s Big Mac. At its height, Red Barn boasted 300 to 400 locations across the U.S. and even expanded into Canada and Australia.
But Red Barn’s growth slowed down after it was bought by United Servomation and later by City Investing Company, who were mainly interested in the chain’s property. Eventually, the brand was discontinued, and by 1988, Red Barn restaurants were no longer around, leaving only fond memories for its loyal customers.
5. Henry’s Hamburgers: A Fast-Food Trailblazer Outpaced by the Competition
Henry’s Hamburgers began in 1954 as a subsidiary of Bresler’s Ice Cream, selling malts and milkshakes alongside hamburgers. In its early years, Henry’s proliferated, with over 200 locations across the United States, even outpacing McDonald’s in restaurant numbers.
However, the chain needed to adapt to the growing competition from fast-food giants like Wendy’s and Culver’s, and it began to decline in the ’70s. Today, only one Henry’s Hamburgers location remains in Benton Harbor, Michigan—a relic of a fast-food brand that once showed tremendous promise.
6. Burger Chef: A Pioneer Overtaken by McDonald’s
Founded in 1957 in Indianapolis, Burger Chef was a significant player in the fast-food industry during the ’60s and ’70s. Known for innovative features like flame broiling and the first kids’ meal, the chain increased and, by 1972, had over 1,000 locations across the country. At one point, Burger Chef was almost as large as McDonald’s, with a loyal following.
But McDonald’s and other fast-food restaurants were too strong for Burger Chef to compete with. When McDonald’s introduced the Happy Meal in 1979, it hurt Burger Chef a lot because Burger Chef was the first to have kids’ meals.
In 1981, Hardee’s bought Burger Chef for $44 million and changed most of the restaurants to Hardee’s, ending Burger Chef’s popularity.
Conclusion:
The restaurant business is very competitive, and even big brands can fail. These six restaurant chains remind us that no brand is too big to fail, with food scandals and tough competition from fast-food places. Though they’re gone now, people still remember their influence on American dining.