A 65-year-old burger chain that once spanned more than 3,000 locations has seen its footprint dwindle rapidly, with fewer than 2,000 outlets remaining by 2025. The abrupt closure of 77 Hardee’s restaurants operated by ARC Burger LLC in late 2025 left nearly 1,900 workers jobless and communities reeling from the sudden voids.
Growing Franchise Strain
The fast-food sector faces mounting casualties as franchise models buckle. In recent years, major operators have filed for bankruptcy, shuttering dozens of locations and displacing hundreds of employees. Some attempted private equity-backed rescues have failed or led to further restructurings. Defaults have surged at some large multi-unit operators, and regional networks have lost control of sizable portfolios, prompting analysts to question whether core economics still allow sustainable profits for some franchisees.
Private Equity Involvement
High Bluff Capital Partners, which manages brands through Rego Restaurant Group and has interests in concepts such as Quiznos, Taco Del Mar, and Church’s Texas Chicken, agreed to acquire a portfolio of 81 Hardee’s sites from Summit Restaurant Holdings via a court-supervised auction in 2023, with the restaurants located across several southern and midwestern states. Summit had filed for Chapter 11 bankruptcy earlier that year. After the acquisition, ARC Burger (affiliated with High Bluff) operated 77 Hardee’s restaurants that later became the subject of a dispute with Hardee’s Restaurants LLC, spotlighting concerns over fee structures and leverage in private equity-backed franchise deals.
Squeezed Margins
Individual Hardee’s outlets often generate seven-figure annual sales, but operators run on relatively slim profit margins after food, labor, rent, and utilities. Industry commentary and lawsuit filings describe additional management or consulting fees layered on top of standard royalties and rent obligations for some operators, further tightening margins. Rising labor expenses and softer consumer spending in 2024–2025 intensified the pressure. While comparable operators in similar markets have stayed afloat, ARC Burger’s network struggled under its obligations, suggesting operator-specific or structural issues contributed to its financial distress.
Abrupt Shutdown and Fallout
Hardee’s Restaurants LLC sued ARC Burger LLC in November 2025 in the U.S. District Court for the Middle District of Tennessee, claiming more than $6.5 million in unpaid royalties, advertising fund contributions, technology and training fees, rent, and taxes. Court documents indicate that ARC Burger began failing to make required payments around December 2024, and Hardee’s issued default notices and attempted to negotiate a resolution before terminating the franchise and sublease agreements. Following the breakdown of those talks, Hardee’s confirmed that all 77 franchised restaurants owned by ARC Burger—across Alabama, Florida, Georgia, Illinois, Missouri, Montana, South Carolina, and Wyoming—would be closed, with many shutting down suddenly near the end of 2025.
Georgia suffered the heaviest losses, with more than 30 sites shuttered—accounting for a substantial share of the 77 closures. In rural areas, these restaurants were often among the few quick-service options, disrupting local routines and nearby suppliers. Employees and customers in multiple markets reported arriving to find locations closed with little or no warning, with signs indicating closure and leaving customers in uncertainty about future operations. Local charities and food banks in affected communities reported increased demand as families faced sudden income loss during the holiday period.
Systemic Challenges Ahead
Hardee’s decline in these markets mirrors broader industry pressures, including higher labor costs, reduced daytime foot traffic tied to remote and hybrid work, intensified delivery and drive-thru competition, and shifting consumer tastes. Public reporting and industry data show Hardee’s lagging behind rivals like McDonald’s and Wendy’s in growth and sales performance, adding to franchisee strain. As of late January 2026, the 77 ARC Burger-operated sites remain closed, though corporate statements and coverage note that some locations could potentially be refranchised or reopened by Hardee’s or new operators in the future. The episode has intensified debates over franchise sustainability, private equity’s role in distressed networks, and possible reforms such as clearer fee disclosures and stronger financial safeguards for both workers and local communities.
Sources
USA Today – Hardee’s locations set to close in 2025
Restaurant Business Online – Struggling Hardee’s terminates a large franchisee; Years of weakness are catching up with Hardee’s
QSR Magazine – Coverage of ARC Burger lawsuit and franchisee issues; Hardee’s system performance and franchise bankruptcies
U.S. District Court, Middle District of Tennessee – Hardee’s Restaurants LLC v. ARC Burger LLC filings
The Covington News – Covington Hardee’s location part of 77 closures
National Restaurant Association – Industry trend data on restaurant and franchise performance
National Franchising Association – Commentary on franchise and private equity issues