July 30, 2008
Restaurant Chains Close as Diners Reduce Spending
By MICHAEL M. GRYNBAUM
NY Times

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.”

"HK" wrote in message
...
July 30, 2008
Restaurant Chains Close as Diners Reduce Spending
By MICHAEL M. GRYNBAUM
NY Times

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.

Thank god the world's best and largest hamburger maker has positioned itself
the market to weather the storm in this sea (boating ref.) of mediocre
restaurant failings.

..