Restaurants on the Ropes

[isilzha]

Restaurants on the Ropes
Rick Newman
On Friday June 12, 2009, 11:05 am EDT

When Americans get stressed out, one thing they do is eat. But apparently not enough.

The dismal economy has punished retailers, with companies like Circuit City and Linens 'n Things going extinct and dozens of others losing money. Now it's hitting their cousins in the restaurant industry, too. The Bennigan's and Steak & Ale chains were early casualties, going belly up last summer. This year, with Americans cutting back on spending, sales at restaurants could fall by 10 percent or more. Analysts don't expect widespread closures, but some chains are likely to close unprofitable outlets, cut back on service, and look for other ways to reduce costs.

As in retail, companies that help people save money will weather the storm better than others. Chains like McDonald's, Pizza Hut, and Olive Garden, which offer ample portions at value prices, should do OK and maybe even pick up market share. It helps if they've been run conservatively, with low borrowing costs and cash held for a rainy day.

More

[BerryBaby]

What's interesting is we just had THREE independent Sushi restaurants open this week and a slew of other restaurants making the scene as well.

People out here are going out to eat a lot as evidence by all the new, and very crowded, new places. Hope it keeps up!

[bakerman]

We still have fairly long waits here even on weekdays. The places that are not so great and overpriced are closing up, but those places that have good food are doing well. I think that people may be more selective when eating out now, and either look for value or a bit of a splurge.

We are in a bit of a bubble here in NC, the economy hasn't taken a huge hit like it has in other places. Our real estate prices are stable and employment is pretty stable too.

[BerryBaby]

Husband went to pickup BBQ last night and said the line was out the door! We have high unemployment, but people are still going out to eat.

[Pluff Mudder]

The Charleston area has had some small restaurants close, but not many. In fact... new restaurants are still opening. But then, Charleston is a foodie town as well as a vacation spot for many. And, Charlestonians do love to go out to eat.