Shifts in the places customers choose for eating out or ordering food means many chains may face a choice of adapt or die — with significant impacts for CRE.

Sources cited in a paper by Trepp analyst Vivek Denkanikotte contended that “restaurant chains and operators this year are on track to declare the most bankruptcies in decades outside of 2020.” The result, he added, is that suburban retail centers are finding it more difficult to secure restaurant tenants with strong credits.

Among the most recent bankruptcies is TGI Fridays, which filed for Chapter 11 on November 2. The chain saw its sales fall 15% to $728 million in 2023 compared to the prior year. Its franchisees were not included in the bankruptcy procedure. The struggles followed another significant bankruptcy — Red Lobster, which filed for Chapter 11 on May 19.