The Surprising Resilience of Failed Fast Food Chains

Losing can be an opportunity to do something different.

Kenny Rogers Roasters.
Kenny Rogers Roasters. InvestmentTotal.com/CC BY 2.0

A version of this post originally appeared on Tedium, a twice-weekly newsletter that hunts for the end of the long tail.

While Kenny Rogers’ “Islands in the Stream” partner Dolly Parton found success with a theme park, Kenny Rogers agreed to let his likeness become the face of an entirely different operation: a rotisserie chicken chain.

The chain began in 1991 thanks in part to former Kentucky Gov. John Y. Brown, who had turned KFC into an international success. And, at first, Kenny Rogers Roasters was on the same track; by 1994, the company already had 109 locations.

But the chain’s reputation never quite lived up to its predecessor, so much so that at one point in 1996 one New York City lawyer put a sign directly above the store with a simple message: “Bad Food.” (The incident also inspired one of Seinfeld’s best episodes.)

So it wasn’t a surprise then, when the chain eventually faltered, and, by 1998, Rogers himself was trying to disassociate himself. The company was sold in 1999 to Nathan’s, the hot dog chain, and after years of declines, the chain—which once had over 300 locations—closed its last location in North America in 2011. 

The real story, though, is what happened just before that. Because while Kenny Rogers was winding down its U.S. operations it was doing the opposite in Asia, having been bought by a Malaysian firm in 2008.  Three years later, the chain was earning $100 million in revenue—nearly all from overseas—despite the fact Kenny Rogers is presumably less of a draw in Asia than he might be in the U.S. 

And, last year, the chain opened up its first Indian location, with the goal of reaching $10 million in sales and 40 to 50 locations in India alone by 2021.

Now, there are more than 400 locations worldwide—topping its ‘90s peak and, in the process becoming one of a number of chains that have faltered domestically but gone on to have strange, often lucrative second lives, whether they exist, like Kenny Rogers Roasters, as successful American exports or whether they persist, like the last remaining Chi Chi’s restaurants in Belgium and Luxembourg, as a wildly diminished if improbably stubborn reminders of a chain’s former greatness. 

Take the case of Miami Subs, a struggling chain that had dwindled to just a few dozen locations by the late 2000s before rebounding and, with the help of the hip-hop icon Pitbull (who, early in his music career, used a Miami Subs location as a makeshift office), expanding aggressively overseas, this time rebranded as Miami Grill.

“I know I am in good company with international music sensation Armando Christian ‘Pitbull’ Pérez as an equity partner,” a franchisee in Myanmar said after opening a shop there earlier this year.  

Other chains persist in different forms, like Wimpy, a popular burger spot in the U.S. before World War II. It later effectively died in 1977 along with its owner, Edward Gold, but, outside of the U.S., it was a different story entirely. Having sold the international naming rights to J. Lyons and Co in 1954, the company was a major hit in the U.K. (though is in decline), and remains particularly prominent in South Africa.

Or take the Mexican restaurant chain Chi-Chi’s, which was largely shut down in 2004 after a hepatitis A outbreak—which came after the company had already filed for bankruptcy—damaged the brand so severely that Outback Steakhouse bought the chain essentially for its real estate. But the name, at least, lives on as a grocery salsa brand, as well as in a number of international locations, particularly in Belgium and Luxembourg.

A Rax in Lancaster, Ohio.
A Rax in Lancaster, Ohio. AndrewSP/CC BY-SA 3.0

Still, sometimes chains don’t rebound—there are no second or third lives, or relaunches overseas, or lingering salsa brands. There’s just strategic mistakes and failure, as in the case of Rax Roast Beef.

The Ohio-based chain began life at a time when many similar chains were coming out of the state, including Wendy’s, Arby’s, and Arthur Treacher’s.

But Rax’s founding story was a little more complicated than its peers. Originally called JAX, it was founded by Jack Roschman, who launched the chain after Ray Kroc declined to let him exclusively operate McDonald’s because of his young age. 

When JAX turned out to be a success, Roschman quickly sold the brand to General Foods in 1969, though General Foods proved to be a poor corporate parent. By 1978, the chain—which had hit an early peak of 195 stores in 1977—was in disarray, with all but 10 stores closing, until one franchisee, Restaurant Administration Corporation, classed up the joint a bit and changed its name to Rax Roast Beef.

Then, they went national, ballooning to more than 500 locations. And while Rax never quite threatened Arby’s, which had some 2,100 locations in 1989, it was for its era, pretty innovative, becoming, for example, the first chain in the country to fry its french fries in vegetable oil, rather than using animal fat, according to Lost Restaurants of Columbus, Ohio.

Like a lot of other restaurants of its time, though, Rax made one huge mistake: it got caught up in the salad bar trend, quickly becoming far more known for its unusual menu additions than for its roast beef sandwiches.

A 1985 ad featuring late Garfield voice actor Lorenzo Music, for example, really nails down the problem: The company’s menu was all over the place, promoting chicken, shrimp, and taco salad, all in the span of a single commercial. By 1991, the company had filed for Chapter 11 bankruptcy, mostly—though not entirely—closing for business in the early ‘90s

The few remaining Rax restaurants—mostly in southern Ohio—have returned their focus to roast beef, after a humbling that few companies could endure. 

“I think it’s a great concept,” Rich Donohue, the chain’s current owner, told the Columbus Business Journal in 2009. “I think it’s been beaten down a little, but it still has a pulse.”

Rax, in other words, is a cautionary tale for fast-food executives—as if they needed one—that the restaurant business is tough, and that chains come and go. 

Just last month, for example, the Chipotle-owned Asian chain Shophouse, which poured heaping helpings of peanut sauce and Sriracha onto many an office-slave’s cruddy week in DC and NYC, closed its doors , mostly because Chipotle couldn’t figure out a way to take the chain national.

For all of the risk, though, the upside of creating a massively popular fast-food restaurant remains bigger than ever. If you pull off even 5 percent of McDonald’s global revenue—$6 billion last year, by the way—that’s still a massive business.

It’s no wonder, then, why Kenny Rogers wanted in.

A version of this post originally appeared on Tedium, a twice-weekly newsletter that hunts for the end of the long tail.