One Of America's Biggest Barbecue Chains Is Failing And The Reason Couldn't Be Clearer

From 2008 through 2017, the trajectory of Dickey's Barbecue Pit was up, up, up. At its peak, the chain had 564 locations. Now, it's down to fewer than 400. Although businesses' financial struggles typically have plenty of factors, with Dickey's, one reason clearly stands out from the crowd: angry franchisees. According to Dickey's Barbecue Pit's website, initial franchise fees range from $30,000 to $50,000 along with 6% of net sales royalty fees and up to 4% of net sales for marketing expenses. Dickey's estimates that a franchisee's initial investment in the chain can start around $181,816, and go all the way up to $465,562 depending on the construction required. When reporting on one 2024 lawsuit filed by franchisee owners, though, Restaurant Dive noted how court documentation shows something quite different. The plaintiffs claimed that actual opening costs ranged from $800,000 to $1 million. Plaintiffs also stated that Dickey's told them to expect about $900,000 in year one revenue — but sales never approached that number.

Disparities like these have been pretty common for the chain. In 2019, Franchise Times ranked franchise litigation by brand, and Dickey's came out on top with 44 disputes per 1,000 units over accusations of fraud, broken agreements, and unauthorized restaurant shutdowns. In 2023, the situation somewhat improved, as Franchise Times cited how Dickey's now ranked No. 4 in legal case numbers. Even so, unhappy franchise owners were still making the same types of complaints.

Although popular restaurant chain franchisees can make good money, the scenario at Dickey's can make it challenging to make a profit. A representative from the Zarco Einhorn Salkowski law firm that has represented multiple Dickey's franchisees highlighted the root of many of these issues is that fact that Dickey's cares about its own profits, rather than its franchisees. First, this attorney stated, it can cost $750,000 to $800,000 to get started with the company. Then, with an average unit volume of approximately $675,000, restaurants can struggle to be profitable. When an average unit volume doesn't exceed $1 million, he added, it can be difficult for a location to operate and stay open. The reality is that, when a franchise comes with too many strings and costs, it can be one of the worst businesses to start — that's apparently been the case with quite a few Dickey's franchises.

To add to the challenges, the restaurant business is tough right now, with plenty of beloved restaurant chains filing for bankruptcy, closing locations, and so forth. But even in the face of the economic climate and its difficulties with franchisees, Dickey's remains optimistic. In 2025, it opened new locations in Alabama, Colorado, and Hawaii. It also opened three ghost kitchens, which don't have traditional storefronts or dining spaces. Instead, a ghost kitchen contains a food preparation space and, when customers send in orders, they receive them by a delivery model.