Restaurant chains close

[Crunch Hardtack]

Link: http://www.nytimes.com/2008/07/30/business/30restaurant.html?_r=1&oref=slogin

Excerpt: "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"

"This month, Steve & Barry’s, a fashion retailer that started an ambitious expansion plan in recent years, also sought bankruptcy protection after finding itself in a credit squeeze after defaulting on a loan."

 

[Terrel L. Shields]

STARBUCKS big losses _ slashing a third their Aussie stores. In NWA, all were built about 05-06 and will close a lot of them. Expect office supply places, furniture places, home improvement, etc...Even the small town cafes are hurting as there are few carpenter crews working and the ones that are bring their sack lunch.

 

[Restrain]

Linens and Things is closing stores around here. Wal-mart has stopped expanding in the area, with two sites already rough-graded with plulmbing lines run.

 

[Laura Goldware]

This is what I've noticed:


Specialty Restaurant Group- American Café, Silver Spoon, L&N Seafood grills. 21 restaurants in the Southeast to close

Bennigan’s/Steak&Ale Tavern – 150 restaurants nationwide to close

Avado Brands Inc. - Don Pablo’s Mexican Restaurants and Hops Grillhouse and Brewery 83 restaurants sold under Chapter 11 proceedings.

Vicorp Inc – 56 Village Square and Baker’s Inn restaurants to close

Buffet Inc – 626 restaurants nationwide including Ryans Family Steakhouse, Old Country Buffet, and Tahoe Joe’s famous Steakhouse are potentially affected.

 

[Michigan CG]

It is not only the declining economy but mainly the cost of food. A typical restaurant needs to keep its food and labor under 60% to survive. Many casual theme restaurants try to keep food cost around 22-28% and a 25% labor.

Steak houses will run higher food costs, maybe 35-40% but their labor needs to be 20% or below.

Food costs have risen immensely with dairy products being the hardest hit followed by grain products.

I would not be surprised to see many pizza places and Italian restaurants close. With everyone paying $4/gal for gas and higher grocery store prices the restaurant sector Casual Dining is being affected as a percentage in sales declines more than the auto industry.

It is hard for Chili's to charge $10 for a burger fries and a drink when you can go to the dollar menu at McDonald's.

 

[Howard Klahr]

Before everyone runs off on speculation, the restaurant chains listed here have been circling the drain for quite a while. These events were not prompted solely by "recent" events.

 

[Vernon Martin]

Has anyone seen any motion in the NNN-leased restaurant cap rates? I appraised a Chili's last year which was being bought on a 5% cap rate. Somehow, I don't think that could happen today.

 

[OSU Beavers]

Damn it, I never got a chance to try a Bennigan’s and now they are closing!

Old Country Buffet has been going down hill for the past year anyway.

 

[Michigan CG]

Has anyone seen any motion in the NNN-leased restaurant cap rates? I appraised a Chili's last year which was being bought on a 5% cap rate. Somehow, I don't think that could happen today.

No movement that I can find, 1st quarter 2008 11.42% cap rate according to Realtytrac.

I can't believe a 5% for a Chili's.....amazing.

 

[James Morris]

I will miss Bennigan's Monte Cristo... nothing like a deep-fried sandwich...