BUST: Multi-Location (MULO) Restaurants & Retailers Declaring Bankruptcy in 2023

Although we all watched in dismay (and perhaps fear) as Bed Bath & Beyond and Jenny Craig took nosedives this year, reports of other brands facing the multi-location (MULO) “apocalypse” may contain more than a little hype.

Here are some facts:

• More than 2,100 retail locations are expected to close in 2023, but Bed Bath & Beyond comprised about 900 of them.
• At least seven MULO restaurant brands are expected to close locations this year. Keep in mind that this is the nature of the brand beast. Although some of these closures may be related to the pandemic’s aftermath, labor shortages, and supply chain issues, most brands with multiple locations are continuously evaluating their sites and closing some so they can invest in others.
• Dollars are being redeployed in some cases from brick and mortar to online plays or upgraded technology at high-performing locations. Lord & Taylor (the oldest department store chain) made a comeback as a digital brand.
• Some brands file bankruptcy as a step toward massive restructuring. This list of bankrupt brands lays out some of the plans they have following major financial announcements.
• Mismanagement, image crises, or over-extensions often lead to bankruptcies within timeless and successful MULO franchise brands. For example, an 8-unit McDonald’s franchisee filed for bankruptcy protection in light of a major crime allegation. Even top-performing brands and franchisees can face situations that they cannot overcome.

If your brand is simply facing serious financial challenges but the entire ecosystem isn’t at risk, here are some things you can do to save face, manage brand image, and retain consumer loyalty.

1. Get out ahead of the announcement. If your PR team isn’t adept at crisis management or financial reporting, seek outside help — before you need it. If you are a franchised business, give local operators media training and access to the right resources.
2. Manage your online listings thoroughly. Seeing a big “CLOSED” banner on a Google listing may be jarring to a local fan. Or, worse yet, you fail to update the listing and someone arrives at your retail or food location to find a notice on the door.
3. Be as helpful as possible to employees whose jobs have been eliminated. Manage all communications with them carefully so they leave with a positive view of your brand.
4. Local marketing is very important at this time. Let customers know the nearest loction where they can find their favorite products or treats. Give the other franchisees or store manager in the area extra marketing help so they can attract “displaced” fans.
5. If you’re moving to a digital-only play, offer powerful incentives for your shoppers to buy online. Companies like Pier 1, Dress Barn, and Modell’s Sporting Goods were all bought by the same holding company. Their expertise in online sales enable these brands to remain alive.

Perhaps most important is for all MULO brands to carefully study the “BUSTS” of our era and understand the decision-making (or too-rapid expansion or lack of innovation) that ultimately sent companies into a nosedive.

As much as we can learn from booming brands, lessons can also be gleaned from those that suffered a decline (slow or fast).

Of course, some of the fails were a result of the pandemic and massive changes in consumer needs and shopping behaviors. That simply points to the need for all brands today to have a solid “disaster plan.”