johnnymk

http://www.nytimes.com/2008/07/30/bu...th&oref=slogin

Several national restaurant chains were shuttered on Tuesday, possibly offering an early taste of what’s in store this year for businesses that depend on free-spending consumers whose budgets are now being squeezed.

The parent company of Bennigan’s, an Irish-themed bar and grill with about 200 sites across the country, filed for bankruptcy, a move that will put hundreds of employees out of work and leave many landlords with empty retail space during a painful time in the real estate market.

A sister brand, Steak & Ale, will also close. Franchise units of Bennigan’s will remain open for now, a spokeswoman, Leah Templeton, wrote in an e-mail message.

The restaurants are the latest casualties in the so-called casual dining sector, considered a cut above fast food. Soaring food costs and a surfeit of locations have hurt the companies’ bottom lines just as Americans are choosing to take more meals at home.

The closings are “something we’re going to see more of over the next 6 to 12 months,” said Amy Greene, a director at Avondale Partners who tracks the restaurant industry.

“The companies have been getting squeezed from all directions,” Ms. Greene said. “You have had minimum wage go up again, commodity prices continue to go up. We’re in a softening consumer market where the consumer is less willing to accept the price increases than they might have been in the past. The companies are having to eat the cost difference.”

Trips to the mall or the local tavern — the casual outings that provide much of the business for midtier retailers — are falling by the wayside, analysts said, as gas prices reach record highs and Americans tighten their household budgets.

“Even folks for whom $3 gas is not necessarily a budget issue appear to be changing their behavior,” said Bryan C. Elliott, an analyst at Raymond James & Associates.

Another hurdle facing these restaurants is their copycat nature. Though Bennigan’s modeled itself as an Irish pub, its menu had Black Angus steaks, Southwestern-style appetizers and tempura shrimp, items that would not be unfamiliar to patrons of, say, T.G.I. Friday’s or Ruby Tuesday.

“All these bar and grill concepts are very, very similar,” said Bob Goldin, executive vice president of Technomic, a restaurant industry consulting group. “They have the same kind of menu, décor, appeal,” which makes it more difficult to establish brand loyalty among customers.

The restaurant chains are owned by the Texas-based Metromedia Restaurant Group, a unit of a business conglomerate owned by the billionaire John Kluge.

The Ponderosa and Bonanza restaurants, which operate under another entity, Metromedia Steakhouses, were not covered in the bankruptcy.

The pain has already spread to other corners of the retail sector. On Tuesday, Mervyn’s, a midtier department store chain owned by a group of private equity firms, also filed for bankruptcy. The retailer, most of whose 176 stores were in California, had struggled for years, and the filing was widely expected this week.

Mervyn’s filed for a Chapter 11 bankruptcy, allowing it to remain in business while it reorganizes. This month, Steve & Barry’s, a fashion retailer that started an ambitious expansion plan in recent years, also sought bankruptcy protection after finding itself in a credit squeeze after defaulting on a loan.

Other mall mainstays, like Linens ’n Things and Sharper Image, have also fallen victim to the economic pain, and retailers like Ann Taylor have said they will close hundreds of local stores.

The closings, especially of popular outlets that expanded quickly in the last few years, will leave commercial property owners in a tight spot, analysts said.

“It’s not going to be easy to replace a tenant at this time, given the status of the industry,” Mr. Goldin, of Technomic, said. “It’s much trickier when you have to retrofit the whole place to fit in another kind of retailer.”

And Ms. Greene, of Avondale Partners, said that financing was also starting to dry up for ailing restaurant chains. “Banks have become less willing to lend to restaurants and franchisees,” she said. “The business fundamentals just do not support it right now.”

cheapie

i don't wish hardship on anyone, but the fewer of these types of restaurants, the better. they only contribute to the "genericizing" and fattening up of our society.

__________________
70% of the world is covered by water. The rest is covered by Bob Sanders

Thesifer

Yeah, the irony being the Entertainment Industry will most likely not see as much of an impact. Entertainment is one of the last things to go. People need it. Yea! for Entertainment.

Sad for everyone else.

I kind of liked Steak and Ale way back when, haven't eaten there in YEARS though.

__________________