Shut Happens: Which Restaurant Will Be Next to Fail?










Restaurant closings. Those are the real signs of the times.
In recent months, Sbarro, Perkins, Marie Callender’s, Fuddruckers, Steak and Ale, Bakers Square, Bennigan’s, Old Country Buffet, Pizzeria Uno, and Charlie Brown’s Steakhouse have all filed for Chapter 11 bankruptcy protection. Employees, investors, suppliers, and customers are all wondering, who’s next?

Even in the best of times, restaurants are a risky business. In a recession, empty tables and stalled prices cut into thin profit margins; combine that with the rising food costs we’re seeing, and the margins are squeezed on two sides.

The restaurants that went belly-up all had some things in common: all were national chains; all were in the quick or casual dining sector, a cut or a few above fast food; and with the exception of the pizzeria chains, all were marked by mediocrity and a sameness of menus. Each was conceived differently— Bennigan’s was modeled as an Irish pub, Perkins as a bakery/luncheonette, Charlie Brown’s fancied itself a classic, clubby steakhouse—but you could walk into any one of them and order shrimp tempura, a buffalo chicken wrap, and a chipotle-flavored something.

Who’s cooking, who’s flaming out?
The Street, an online media company that covers investing and finance, compiled a Bankruptcy Watch list of the 14 restaurant chains with the greatest likelihood of failure in the coming months. From least to most risky they are:

14. Red Robin Gourmet Burgers
13. Sonic
12. Ruby Tuesday
11. Carrols Restaurant Group (operates Pollo Tropical and Taco Cabana, and Burger King franchises)
10. Einstein Noah Restaurant Group (Einstein Bros., Noah’s, and Manhattan Bagels)
9. O’Charley’s (O’Charley’s, Ninety Nine Restaurant, and Stoney River Legendary Steaks)
8. Ruth’s Hospitality Group (Ruth’s Chris Steak House and  Mitchell’s Fish Market)
7. McCormick & Schmick’s
6. Bravo Brio Restaurant Group (BRAVO! Cucina Italiana and BRIO Tuscan Grille)
5. Domino’s Pizza
4. DineEquity (IHOP and Applebee’s)
3. Morton’s The Steakhouse
2. Wendy’s/Arby’s
1. Denny’s

Not to worry—even if the worst-case scenario plays out 14 times, striking everyone on the list, we’re still left with plenty of mediocre chain restaurants where we can go to satisfy a yen for nondescript, chipotle-flavored something.

Visit The Street for the details outlining each company’s potential for bankruptcy.


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One Response to Shut Happens: Which Restaurant Will Be Next to Fail?

  1. Uh….There’s a problem here? However, I would miss “Happy Hour” at Sonic 🙂

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