I just finished wrapping up the chapters in the new book1 on the dangers of denominator bias, along with related chapters on lack of context, framing, and the inherent deceptiveness of asymmetrical arguments.
Simultaneously with sending those to my editor, an email arrives asking: “If the economy is so robust, how do you explain all of these restaurant closings?!” They sent a video from a woman, Wendy Bell, who is incensed at America’s apparent economic collapse.
That was news to me. As I mentioned last week, it is increasingly difficult to get a restaurant reservation (at the better places, anyway).
I watched the video, a cacophony of denominator bias, lacking any context, filled with inherently deceptive asymmetrical arguments, and zero framing (other than overt partisanship).
A few issues leaped out as I listened to this:
Context: Is this a lot of restaurant closings? The same as usual? Less? Without knowing average closings per year this information is useless.
Denominator blindness: This list of a few hundred restaurants – out of how many? Is this significant?
Asymmetry: A list of closures without a list of openings is rather deceptive.
Inaccuracy: The day after I started writing this, the hivemind pointed out many inaccuracies in the list, leading to a community note showing many errors (below). A quick Google search revealed other errors, falsehoods, and outright misinformation as well.2 Reddit also stepped up.
Old & Tired: For the most part, the list is filled with mediocre chains and junk food joints, commonly found in malls and shopping centers, which all have their own retail issues. Some of the musty old joints have been around since the 1980s, and many have had issues with Private Equity investments.3
If you wanted to engage in honest debate about the economy via restaurants, you would consider the following:
Openings: Nearly 53,800 restaurants opened their doors for the full 2023 year, up 10% from 2022. Or, compare that to the pre-pandemic year. In 2023, openings were up 2% versus 2019, a modest increase compared to before the lockdowns. Source: Axios
Closures: “According to the latest research, 60% of new restaurants fail within the first year, 70% in their second year and 80% close their doors within five years. The average lifespan of a restaurant is only 4.5 years.” Source: Binwise
The US National Restaurant Association recognizes a 30% failure rate as the norm in the restaurant industry. Source: Restaurant.org; See also Why Do Restaurants Fail?
Total: There are 749,000 restaurants in USA, a few 1000 close every year. Even an accurate list of closures tells you little about the state of the economy. Source: Restaurant Industry Statistics
There are many crosscurrents in the economy, and it is difficult for an honest information consumer to understand what is going on. Garbage like this from people purposefully trying to confuse the public is disgraceful. This is why investors must always be on guard against nonsensical claims such as this…
Original Transcript of Wendy Bell misinformation, Twitter Community note, and Redditt corrections after the jump.
Previously:What Is the Consumer Doing…? (May 20, 2024)
Wages & Inflation Since COVID-19 (April 29, 2024)
Is Partisanship Driving Consumer Sentiment? (August 9, 2022)
__________1. Working title: “Debunking Financial Bullshit”
2. No, FUDDRUCKERS is not closing; all 92 locations were acquired in 2022. The CEO responded to “Viral Misinformation” about their locations in the US, Mexico, Puerto Rico, and Canada, noting. Fuddruckers is experiencing growth, (but did close a few underperforming locations in the past year).
When the very first example is easily found to be very wrong, you can assume little or no research was performed.
3. We could have saved a lot of time and math simply by observing anyone who says “Macaroni Grill, God they got a good Margarita pizza!” is obviously a clueless dolt not to be taken seriously regarding anything with food, restaurants, or what have you…
Here is the list of INACCURATE and MISLEADING information from Wendy Bell:
I got a new list of restaurants closing in 2024 all that be now ready?
Fuddruckers is expected to close all of its locations by the end of the year (I love Fuddruckers! thanks Joe!)Old Country Buffet, closing all of its remaining locations biscuits and gravy reallyIHOP closing 100 locationsBuffalo Wild Wings closing all of its Canadian locations as well as sixty in the United statesApplebee’s closing 35 restaurantsRed Lobster closing 50 locations as they enter bankruptcyDenny’s closing 20 locations by the end of the yearMarie Callender’s great pie closing all of its remaining locationsPizza Hut planning to close 500 restaurants Outback Steakhouse closing 40 one of their 700 locations Sabarros it’s closing a total of 50 locations with majority being mall locationsMarty or Marge pizza closing a total of 27 locationsRuby Tuesday closing 16 restaurantsBBQ closing eight of their 59 locationsJoe’s Crab Shack these closing 41 of its 60 restaurants you guys ever had one of thoseBonefish Grill closing 7 restaurants
ohh wait a minute there’s more middle out bottom up
Johnny Carino’s closing 30 locationsQuizno’s Subs 140 locations shutteredMacaroni Grill – God they got a good Margarita pizza — closing 31 restaurantTGIFriday’s 233 restaurantsCorner Bakery Cafe closing 104 locationsAu Bon Pain 100 stores and I still don’t know how to say that oneOh Charlie’s 64 restaurants and91 Boston Market locations proof are going away
Just like $7 billion of student loan debt just like that that’s what we call Biden magic and just think how many jobs go along with each restaurant closing
TWITTER COMMUNITY NOTE:
Many of the restaurant closings did not occur in 2024 or at all. For instance, the closing of 500 Pizza Huts occurred in 2019, Fuddruckers is experiencing growth, Marie Callenders is still operating 24 locations. There are also no reliable sources for numerous entries.
Pizza Hut closures in 2019
Fuddruckers growing, not closing
Marie Callenders still operating all locations
REDDIT says HOLD MY BEER:
Apparently Joe Biden is why restaurants are closing
Biden is apparently responsible for all of these restaurants shutting down.
I don’t know who the woman is, but she’s some dumb right wing talk show host, I’m guessing. I love how she lists the restaurants like they’re sponsors and doesn’t provide context as to why these closures are happening.
She then mentions student loan debt because for some reason, helping people pay back their loans required for education so they don’t file for bankruptcy is bad. And she has no evidence that student loan forgiveness ruins the economy.
