Less than three months into 2025, and the restaurant industry is still stuck in the doldrums thanks to sluggish traffic and high borrowing costs — a situation that has triggered major layoffs at many brands.
New forms of disruption could further destabilize companies. The U.S. government’s plans to implement steep tariffs will likely inflate supply costs as U.S. trading partners retaliate. On Thursday, The Federal Reserve Bank of Atlanta slashed its Q1 GDP forecasts from 3.9% growth in early February to a 2.4% contraction — a swing of 6.3%.
But the possible impact of trade wars is still in the future. In the present, at least six major restaurant firms have slashed their payrolls. Here’s who and why.
Starbucks
Starbucks first announced it would lay off a number of corporate support workers in January, but when the cuts finally came on Feb. 24, the scale was surprising. About 1,100 workers — 6.9% of its non-retail workforce — were let go.
The job cuts were accompanied by a return-to-office mandate for executives at the vice-president level and above, and a shift toward in-person hiring for most corporate roles.
It had been evident for some time that some sort of restructuring was likely for Starbucks. Traffic and same-store sales have struggled to grow for a while, and last year its board tasked CEO Brian Niccol with a thorough reform of the brand.
Niccol said Starbucks’ restructuring accompanying the job cuts was intended to reduce managerial layers and redundant roles. The scale of the layoffs is likely to require a significant one-time expenditure by the brand, which said it would provide some compensation, healthcare and career transition services to impacted workers as they leave the company.
Grubhub
The second-largest industry layoffs of the year so far happened at a tech company, not a restaurant brand.
Grubhub, which was acquired by Wonder earlier this year, sacked 500 corporate workers in late February.
The delivery aggregator has fallen behind competitors DoorDash and Uber Eats in terms of U.S. marketshare, despite partnerships with Hilton, Amazon and Albertsons.
Grubhub’s CEO Howard Migdal said the job cuts would maximize the firm’s potential and allow Grubhub and Wonder to focus on core priorities, like expanding Wonder’s location base.
Bloomin’ Brands
Bloomin' Brands laid off around 100 corporate employees in February. The company said the cuts followed the refranchising of its Brazilian stores late last year, and were necessary to align the company’s workforce size with the scope of its operations.
Michael Spanos, who joined Bloomin’ as CEO from Delta Airlines last year, said on the brand’s February earnings call that the structure resulting from the layoffs is “more cost efficient and more effective in speed of decision-making by flattening layers and empowering our brand presidents with the resources and dedicated teams to drive their business.”
The Outback Steakhouse owner said the cuts would save it $22 million in a year, but cost $7.5 million in severance costs.
The layoffs followed six consecutive quarters of slipping same-store sales for Bloomin’s flagship brand and came about a year after Bloomin’ closed more than 40 underperforming restaurants. Shortly after the layoffs, Bloomin’ announced it would slow down its unit growth plans in the U.S. and shift $40 million in expected savings into a remodel program for Outback.
Dine Brands
Dine’s core brands, IHOP and Applebee’s, have struggled to grow same-store sales for some time.
In February, Dine laid off 9% of its corporate workforce, or likely about 50 people. The move was framed as a response to general market conditions.
Like Bloomin’, Dine is at the start of a multi-year remodel effort for one of its core brands. Dine’s plans include remodels at Applebee’s and the accelerated construction of dual-branded IHOP/Applebee’s restaurants in the U.S.
Denny’s
Rounding out the casual giants that enacted layoffs in the last month is Denny’s. CFO Robert Verostek said the chain had undergone a headcount reduction at its corporate support centers, which would result in 3.5% to 4% savings on its corporate general and administrative expenses.
While Denny’s offered little detail on its layoffs, the chain is speeding up the pace at which it is closing underperforming stores, with 70 to 90 set to shutter in 2025. Unlike Dine and Bloomin’, however, Denny’s managed to get out of a multi-quarter sales slump in Q4, when same-store sales grew 1.1% year-over-year.
Topgolf
Artie Starrs, speaking on Topgolf Callaway’s Q4 2024 earnings call, said the chain was “streamlining our home office structure to better support our venues and run a more agile organization.”
Starrs said the ongoing reorganization was intended to reduce the company’s cost base as it prepares to be spun off by its parent company. The eatertainment brand saw a sharp drop in same-venue sales — 8% in Q4, according to the earnings call.
The scale of that drop is in keeping with traffic erosion experienced elsewhere in eatertainment. Pinstripes, now seeking strategic alternatives, saw its same-store sales fall by 7.7% last quarter.
