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Page added on July 30, 2008

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Restaurant Chains Close as Diners Reduce Spending

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.”


New York Times



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