The restaurant industry is still analyzing the effects of last week’s funhouse ride on Wall Street. But one scream of fright should’ve been audible before the white-knuckle trading began: There’s been another wave of restaurant bankruptcies, this time of franchisees.
The busts tend to get less attention than the filings of a brand’s parent company, which themselves have been less than high-profile in recent weeks (the most recent chain to put creditors at arm’s length: Bill Johnson’s Big Apple, a five-unit chain of family restaurants in the Phoenix area).
Taken together, the bankruptcies prove the industry shakeout is still underway, this time on a market-by-market basis.
It’s tough to read a pattern in the failures. On first glance, fast food is the source for a disproportionate number. This Wednesday, an auctioneer in Dallas will sell off the Burger King units of a bankrupt franchisee. A bankrupt El Pollo Loco operator has nine units on the block in southern California. The weekend brought news that a Rally’s franchisee in Birmingham, Ala., was throwing in the paper napkin.
But the full-service sector has seen its share of failures, too. Chevys, a low-ticket casual chain, lost two stores in St. Louis when an eight-unit franchisee there couldn’t cut the mustard.
A number of family restaurants, including franchises of bankrupt Perkins & Marie Callender’s, have provided the bankruptcy courts with considerable business from that segment.
Here and there, a common element does crop up: Locations rendered unfeasible by the economic downturn. It’s often less a matter of a traffic freefall than a function of a rent that’s tough to cover.
The outcome should be healthier local markets. Supply usually dips, to some degree, and the shuttered stores provide an expansion opportunity if the landlord is more realistic going forward about the lease.
The question, underscored by last week’s roller coaster, is how all this uncertainty is going to affect consumers and lenders.
Showing posts with label bankruptcy. Show all posts
Showing posts with label bankruptcy. Show all posts
Tuesday, August 16, 2011
Friday, November 26, 2010
Another rough patch for restaurants?
The job to have these days is supplying restaurants with “For sale or rent” signs. The last two months alone would’ve made your year.
The bankruptcy of CB Holdings, parent of the Charlie Brown’s, Office and Bugaboo Creek steakhouse chains, snagged the headlines. But it was hardly the only operator to shutter restaurants (about 32 of its 80 outlets).
A Sonic franchisee in Florida benched the carhops at its 11 stores. Ted’s Montana Grill put nine of its 55 restaurants out to pasture. Jack in the Box shut 40 restaurants.
Recent times have been particularly lethal for landmark one-offs, like 91-year-old Lahiere’s in Princeton, N.J.; 53-year-old Terri’s in Portsmouth, Va.; nearly-40-years-old Stratton’s Dairy Dip in Ashland, City, Tenn.; and Elisha’s in Milford, N.H., a youngster with just three-and-a-half decades of operation.
Add in the bankruptcy of The Glazier Group, operator of the Michael Jordon’s and Strip House steakhouses, and it’s difficult to deny that the shakeout has intensified again.
The question is, how long will that rev-up continue? Is this just a year-end blip, a result of places assessing where they stand for the year and realizing they’re too far in the red?
Or is this an indication the recession could be a double-dipper for many restaurants? Did too many places bet they could ride out the downturn without adjustments, only to learn this is more of a new reality than a temporary departure from the business they knew?
Come January and February, we’ll know for sure.
The bankruptcy of CB Holdings, parent of the Charlie Brown’s, Office and Bugaboo Creek steakhouse chains, snagged the headlines. But it was hardly the only operator to shutter restaurants (about 32 of its 80 outlets).
A Sonic franchisee in Florida benched the carhops at its 11 stores. Ted’s Montana Grill put nine of its 55 restaurants out to pasture. Jack in the Box shut 40 restaurants.
Recent times have been particularly lethal for landmark one-offs, like 91-year-old Lahiere’s in Princeton, N.J.; 53-year-old Terri’s in Portsmouth, Va.; nearly-40-years-old Stratton’s Dairy Dip in Ashland, City, Tenn.; and Elisha’s in Milford, N.H., a youngster with just three-and-a-half decades of operation.
Add in the bankruptcy of The Glazier Group, operator of the Michael Jordon’s and Strip House steakhouses, and it’s difficult to deny that the shakeout has intensified again.
The question is, how long will that rev-up continue? Is this just a year-end blip, a result of places assessing where they stand for the year and realizing they’re too far in the red?
Or is this an indication the recession could be a double-dipper for many restaurants? Did too many places bet they could ride out the downturn without adjustments, only to learn this is more of a new reality than a temporary departure from the business they knew?
Come January and February, we’ll know for sure.
Friday, April 10, 2009
The battle's turning, but so is the body count
Heard the good news? The worst is over for restaurants, or at least that’s what several research and news reports indicated this week. There’s just one problem: A lot of places won’t be there to enjoy it. They’re part of what’s starting to look like a tsunami of restaurant bankruptcies and forced closings.
Two subsidiaries of the Fatburger fast-casual chain filed for protection from creditors yesterday. A day earlier, Crain’s New York Business reported that Town, the highly rated New York outpost of chef Geoffrey Zakarian, was being pressured by two vendors to file for bankruptcy because the place hadn’t paid their bills.
The Pink Taco, an unqualified smash when it opened in Scottsdale to controversy over its name, has closed its legs for good. Also gone is another one-time hotspot in the area, the Fox Sports Grill.
The franchisor of the 37-unit Tumbleweed dinnerhouse chain threw in the napkin last week. Outback shuttered all nine of its steakhouses in Ontario. The lone Bob’s Big Boy in Glendale, Calif., the chain’s birthplace, is changing into something else.
The casualty list goes on and on, of places famous (Fior d’Italia, the San Francisco outlet that bills itself as America’s first Italian restaurant) or only locally known (the two Risotto’s MedRim Bistros in south Texas).
Yet the surging shakeout is hardly a contradiction of the positive outlook some are now airing for the business. It’s much more of a necessary correction, a painful symptom that has to be weathered while the trade’s overall health improves. Just as economists are predicting more job losses as the nation’s financial well-being starts to turn for the better, the industry is going to lose a lot of outlets, and not an insignificant number of brands. It’s part of the healing.
Two subsidiaries of the Fatburger fast-casual chain filed for protection from creditors yesterday. A day earlier, Crain’s New York Business reported that Town, the highly rated New York outpost of chef Geoffrey Zakarian, was being pressured by two vendors to file for bankruptcy because the place hadn’t paid their bills.
The Pink Taco, an unqualified smash when it opened in Scottsdale to controversy over its name, has closed its legs for good. Also gone is another one-time hotspot in the area, the Fox Sports Grill.
The franchisor of the 37-unit Tumbleweed dinnerhouse chain threw in the napkin last week. Outback shuttered all nine of its steakhouses in Ontario. The lone Bob’s Big Boy in Glendale, Calif., the chain’s birthplace, is changing into something else.
The casualty list goes on and on, of places famous (Fior d’Italia, the San Francisco outlet that bills itself as America’s first Italian restaurant) or only locally known (the two Risotto’s MedRim Bistros in south Texas).
Yet the surging shakeout is hardly a contradiction of the positive outlook some are now airing for the business. It’s much more of a necessary correction, a painful symptom that has to be weathered while the trade’s overall health improves. Just as economists are predicting more job losses as the nation’s financial well-being starts to turn for the better, the industry is going to lose a lot of outlets, and not an insignificant number of brands. It’s part of the healing.
Tuesday, December 2, 2008
A seal of security for gift cards
Sales of gift cards are expected to be bah-humbugged this year by fears the issuing restaurants will go bankrupt, leaving card holders with worthless plastic. Today several major chains revealed they’re hoping to allay those worries by promoting what amounts to a Good Shopping Seal of Approval.
They’ve formed a self-policing trade group, the Retail Gift Card Association, that will extend membership solely to restaurant and retailing brands with “longevity in the marketplace” and a commitment to “customer friendly practices.”
In addition, participants are required to meet “a set of principles” that protect card buyers, according to the announcement.
The charter members include Applebee’s, Subway and Marriott. Their partners are the retailing giants Best Buy and Home Depot.
The association said it will be strict in enforcing its membership requirements, but expressed hopes that all retailers will meet those standards and qualify for inclusion.
Research from the National Retail Federation indicates that 3.1 percent of shoppers are cutting back their gift card purchases this year because of fears that the issuing store or restaurant will go out of business. The NRF is forecasting that sales of cards will drop 5% overall from last year’s levels, to about $24.9 billion.
They’ve formed a self-policing trade group, the Retail Gift Card Association, that will extend membership solely to restaurant and retailing brands with “longevity in the marketplace” and a commitment to “customer friendly practices.”
In addition, participants are required to meet “a set of principles” that protect card buyers, according to the announcement.
The charter members include Applebee’s, Subway and Marriott. Their partners are the retailing giants Best Buy and Home Depot.
The association said it will be strict in enforcing its membership requirements, but expressed hopes that all retailers will meet those standards and qualify for inclusion.
Research from the National Retail Federation indicates that 3.1 percent of shoppers are cutting back their gift card purchases this year because of fears that the issuing store or restaurant will go out of business. The NRF is forecasting that sales of cards will drop 5% overall from last year’s levels, to about $24.9 billion.
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