Popular burger chain begins closing down restaurants
The company is struggling to avoid the fate of rivals like Red Lobster and Hooters.
The restaurant business has relatively low margins coupled with a limited ability to raise prices. Consumers don't really care if an eatery sees its labor cost increase because of market conditions or if its rent increases because its lease has come up.
People only have so much tolerance for price variance. They may be willing to pay more for the same meal in an airport or some other place where prices tend to be higher, but they're not going to tolerate that in most places.
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In most cases, consumers have a vague idea of what a chain charges. Each location may have some wiggle room or the ability to charge more for drinks or dessert, but prices generally fall within a certain range.
That can lead to problems when the cost of operation rises. Labor has generally pushed higher in most markets, and rents have gone up in parts of the country. In many cases, those increases are passed onto consumers, but when a restaurant uses value as part of its marketing proposition, it can be challenging to absorb those increases.
