'Devastating to businesses': Kevin O'Leary explains why restaurants are shuttering across America — and why he thinks more will follow

“Seemingly every day, there's a headline announcing a bankruptcy, layoff or store closure impacting one of the country's most beloved brands.”

Rising food prices, declining foot traffic

O’Leary says many restaurants haven’t truly recovered from the effects of the pandemic — for one, customers have become a lot more comfortable with ordering their meals straight to their doorsteps.

And with the transition to remote or hybrid work, folks aren’t getting lunch with colleagues as often.

“This has been devastating to businesses that invested in brick-and-mortar locations,” O’Leary wrote. “Eateries in urban locations have been hit especially hard as their expensive locations are no longer receiving the footfall they need to meet rent.”

Lingering supply chain issues from the pandemic, he says, have contributed to the rise in food prices. According to the U.S Department of Agriculture (USDA), from 2019 to 2023, the all-food Consumer Price Index surged by 25% — higher than other major categories, including housing and medical care. Supply chain issues contributed to the increase in food prices in 2020-21, the USDA says, while an avian influenza outbreak and the conflict in Ukraine bumped up prices in 2022.

O’Leary adds that inflation is leading many consumers to tighten their wallets and pull back on discretionary spending.

“In this economy, an 'upscale McDonald's' is a luxury that many can't afford,” O’Leary wrote.