Tough Times for Chain Restaurants

From the July 30 Wall St. Journal:

[The bankruptcy filing by Bennigan's and Steak and Ale] is the most extreme sign yet of how midprice, sit-down restaurants are undergoing one of their worst periods in decades...

High ingredient and labor costs are eating into profits, and several years of rapid expansion by bar and grill chains has left a glut of locations in the market. Pressures such as high gasoline prices and dwindling home values have prompted consumers to eat out less often or switch to cheaper fast-food meals.

The venerable chains weren't able to survive in part because their menus and atmosphere failed to set them apart from the pack...

"There's just too many stores in this category... most of these places aren't even that full on a Saturday night." Chains have already started slowing their expansion and shutting locations, and [restaurant consultant] Mr. Paul expects that will accelerate.


This news struck me in light of the announcement of the upcoming Chipotle on Fountain Square. Perhaps this trend favors places like Chipotle, one of the better fast food establishments (or at least it used to be, I haven't been in a while).

Employees of chains might find out the hard way [the Chicago Bennigan's was given only a few hours notice] if places like Max & Erma's, Lone Star Steaks, Olive Garden, etc. start closing around here. Old Country Buffet already filed for bankruptcy this year but plans to restructure and re-open.