Posted on 10/04/2025 6:42:14 AM PDT by CIB-173RDABN
For decades, mid-tier casual dining chains have occupied a comfortable place in American life: a step above fast food, offering consistent menus, a sit-down experience, and a sense of convenience. Yet a closer look at the economics of these franchises reveals a system that inflates prices for consumers while funneling the bulk of profits to the parent corporation. Combined with changing consumer habits, mounting economic pressures, and reliance on consumer credit, this model may be approaching a breaking point.
At first glance, the price of a breakfast plate—eggs, bacon, pancakes—seems far above the cost of raw ingredients. Yet most people don’t see the layers of expense embedded in every menu item. While the franchise buys food in bulk, often securing eggs, flour, and dairy at deeply discounted wholesale prices, those costs represent only a fraction of the total. Labor, utilities, insurance, and equipment maintenance often account for the majority of expenses. Add in commercial rent—frequently paid to the corporate entity that owns the land—and royalties on sales, and the cost of delivering a single meal rises dramatically. In many cases, the corporation profits far more from these structural fees than from food itself, leaving franchise operators to pass the costs to the consumer.
Corporate management may provide centralized services, maintenance, or marketing, but these come with back charges to the franchisee. Every layer of corporate involvement—necessary or not—translates into higher menu prices. Even hedging commodity costs or buying in bulk cannot offset the cumulative effect of rent, labor, royalties, and corporate fees. Consumers, especially those living paycheck to paycheck, end up paying not only for the food but for the corporate infrastructure that surrounds it.
A hidden factor that keeps these chains afloat today is consumer debt. Many customers rely on credit cards or BNPL (Buy Now, Pay Later) programs to pay for meals, temporarily masking the fact that prices may be unaffordable. For debt-fueled spending, the immediate cost feels irrelevant; consumers are effectively borrowing their way to convenience. But this is a fragile foundation. If the credit bubble bursts—or if interest rates rise, limits are reduced, or defaults increase—customers will have far less discretionary spending available. Fewer people dining out will directly hit revenue, exposing how dependent the casual dining model has become on borrowed money.
History offers lessons on the danger of failing to adapt. Sears, once America’s retail giant, ignored the rise of online commerce and lost to Amazon. Kodak, which invented digital photography, clung to film and missed the digital revolution. Detroit automakers, heavily invested in fuel-inefficient vehicles, ceded market share to nimble foreign competitors. These examples illustrate a broader principle: even dominant business models can falter if they fail to evolve with the market.
Casual dining franchises face a similar inflection point. Inflation, higher labor costs, and rising rents are pushing prices beyond what many Americans are willing—or able—to pay. Meanwhile, the convenience of dining out is challenged by the simplicity and affordability of home cooking. Small, owner-operated restaurants offer competitive pricing, freshness, and flexibility that corporate chains struggle to match. As the debt-driven consumer bubble is tested, the fragility of the casual dining model will be exposed. If enough people reduce spending, the chain model—built on corporate overhead, fees, and high prices—may collapse under its own weight.
In the end, high menu prices at mid-tier casual dining restaurants reflect a combination of corporate greed, structural overhead, and reliance on consumer credit. Without fundamental changes—simplifying operations, reducing unnecessary corporate layers, or adapting to the real spending power of consumers—these chains risk irrelevance. Like the retail giants and industrial powerhouses of the past, decades of success offer no guarantee of survival in a rapidly changing economic landscape.
Ate a bacon egg and cheese sandwhich and soda at ,ocal reste4au t for y3ars. Cost me $6 including tip. Th3n obama hzppened, (p4ices fo4 everything s,yrocketted, gas more thsn doubled to $4.60 a gallon etc) and price went up to $8, then stayed there during trump, then rose again under biden- same breakfast now costs a little over $10 without tip now.
Do you write everything with AI?
We stopped at an IHOP just the other day for breakfast just because we were already in the shopping center. We had the senior breakfasts which weren’t that badly priced but they charged $4.29 for a cup of coffee! We said never again. There’s a local place where we can go and put $100 in the machine and play poker or keno and get our breakfasts free. At least we have a chance of winning and don’t feel like we’re just getting screwed. But we’re in Vegas so.....
Almost every time we go out to a restaurant to eat, The Colonel’s Wife says we could have eaten better food for much less money at home. And that’s true, it’s really the convenience factor (or the busyness factor that has us out and about during meal times) rather than the easy credit issue. We use a credit card to eat, (for the Southwest Airlines points)but we pay off the entire balance of our bill every month. Have for the last 20 years.
About 60 years ago, food costs were typically in the 40% range on average.
Casseroles are easy to prepare and can last several days.
A can of C, a package of P, a sprinkling of S and in the oven it goes.
Do you write everything with AI?
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I use AI for the research.
I write out a draft and AI corrects it, I then rewrite it. A I edits it again, and so on.
So I am using AI first for research and then for editing.
It is no different then any writer. I could do the research on my own but AI can do in seconds would take me hours.
I could write a article without AI editing but it would not be as good.
So if you have a problem with AI then you have a problem with most books, newspapers, and magazine being publish because they all user researchers and editors.
The idea is mine, the first draft is mine, the direction of the article is mine. AI cleans it up.
Hope that answers your question.
Soups are very easy to prepare.
As they contain lots of water, they are good for reducing weight.
Writing on a blog should be as simple as possible (and not to meet educational institution requirements).
Emulate the ad copy guy and not the medical textbook contributor.
I went to my kitchen and ate some food. No idea what it cost.
‘these chains risk irrelevance’ Don’t eat at ‘these chains’
Did your AI research offer any kind of analysis of the different costs of running a restaurant?
“they (IHOP) charged $4.29 for a cup of coffee!”
Yeah; we learned that the hard way a few months ago.
In fact, the cost of beverages when eating out are consistently outrageous. We order water, and drink other stuff at home. Unless we’re on a road trip and MUST have coffee.
If you watch the “Route 66” series produced in the early 60s, you see that most of the restaurants are mom ‘n’ pop, NOT franchise chains. Sometime since then the franchises took over almost all dining.
And coffee used to be complimentary with your meal
From farm to food processor middlemen to kitchen help, illegal labor has been an accepted part of the restaurant cost equation. Now though, for good policy reasons, the illegals are being sent home and labor cost increases are trickling through the restaurant industry.
Both these factor make for a one time price re-balancing, and restaurant price increases seem unlikely to continue. Instead, as domestic wages increase, restaurants will find ways to constrain prices and attract a new customer base.
Grand Slam at Denny’s went from about $7.50 to $15 over COVID.
We too have noticed the high cost of eating out for breakfast - went to a small breakfast place where you order at a window and they bring the food out to the patio.
We split a breakfast bagel sandwich, had two coffees and a donut which we also split - bill came to $33 after a 15% tip.
We’ve decided from now on to buy our own bagels, brew our own coffee and forgo donuts.
The first is the Biden inflation surge.
The biggest reasons prices are higher are because the government (mostly the Left) steals from everyone to give to others. Those who receive money for nothing are not careful with it and waste enormous amounts. We pay for it with higher prices everywhere.
It is no different then any writer.
*****
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