HAWAII - While Hawaii is often viewed as a tropical paradise, its restaurant industry is facing a distinct "Island Squeeze" this March. The high cost of shipping ingredients across the Pacific, combined with a $16 minimum wage hike and a shift in tourist spending, has forced several national giants to re-evaluate their presence in the 50th state.
From Oahu to the Big Island, here are the three major restaurant chains closing doors in Hawaii this March 2026.
1. Pizza Hut: Retreating from the "Red Roof"
As part of the parent company, Yum! Brands' massive "Hut Forward" initiative, roughly 250 underperforming locations are being shuttered nationwide in the first half of 2026. This March, Hawaii’s legacy dine-in spots are reaching their final chapter.
- The Strategy: The company is aggressively moving away from large-format buildings with dining rooms and salad bars. In Hawaii, where electricity and air-conditioning costs for large spaces are among the highest in the nation, the brand is prioritizing small, delivery-only storefronts.
- The Hawaii Impact: Many of these iconic red-roofed buildings in mid-sized communities are being evaluated for closure. The goal is to swap expensive real estate for high-tech "Delco" (Delivery/Carry-out) hubs that require significantly less staff and overhead.
2. Denny’s: The Final Wave of the 150-Store Purge
Following a major $620 million acquisition by private investors, Denny’s is finishing its nationwide "surgical" reduction of underperforming sites. While several mainland locations vanished late last year, the final casualties in the islands are being processed this March.
- The 24/7 Crisis: In Hawaii, the challenge of staffing 24-hour diners has become a breaking point. With a highly competitive labor market and rising wages, many franchisees are finding it impossible to keep the lights on through the overnight shift.
- The "Value" Problem: The new owners are prioritizing "net positive growth." For Hawaii locations burdened by aging infrastructure and the "last mile" cost of food transport, March lease renewals are resulting in permanent shutdowns rather than costly renovations.
3. Starbucks: The "Efficiency Overhaul" Continues
While it seems like there is a Starbucks on every corner, the coffee giant is in the middle of a strategic restructuring that involves closing roughly 400 North American locations. This March, several underperforming Hawaii stores—particularly those without drive-thrus—are slated to go dark.
- The Reason: CEO Brian Niccol’s new strategy focuses on "reclaiming the third place" while simultaneously cutting low-margin locations. In tourist-heavy areas like Waikiki, stores that rely solely on walk-in traffic are being scrutinized amid rising commercial lease costs.
- The Shift: Starbucks is pivoting toward "Pickup" only stores and high-efficiency drive-thru lanes. For older Hawaii locations with large seating areas but lower throughput, March marks the end of their run.
The Hawaii "Island Squeeze"
Why are these closures peaking in Hawaii this month?
- The $16 Minimum Wage: Hawaii’s minimum wage increased to $16 per hour at the start of 2026. For legacy chains with low profit margins, this March marks the first full quarter of higher labor costs, forcing tough decisions for underperforming sites.
- Tourism Sputter: Recent reports from the University of Hawaii Economic Research Organization (UHERO) show a significant "sputter" in tourist arrivals and spending. With fewer international visitors, restaurants in high-traffic zones are seeing revenue drops of up to 20%.
- The "Last Mile" Surcharge: The cost of goods in Hawaii has risen 5% since early 2025 due to shipping and tariff fluctuations. National chains are finding it harder to maintain "Mainland pricing" in the islands without bleeding cash.
