Despite hard times, zombie restaurants just keep hanging on
Posted by
Brian (aka trav007)
Dec 27 '11, 11:39
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Slicing Costs, and Still Serving
By WILLIAM NEUMAN
Published: December 27, 2011
The New York Times
You see them all across the country, in shopping malls and street corners, suburban towns and city centers: zombie restaurants.
Many of the undead are part of familiar chains that filed for Chapter 11 bankruptcy protection this year: Friendly�s, Chevys, Sbarro, Perkins. The zombie restaurants, barely bringing in enough cash to cover basic expenses, always seem to be one sizzling fajita or glazed chicken skewer away from a merciful end, but somehow keep hanging on � leaving too many restaurants chasing after scarce dining dollars.
�There�s a lot of walking dead,� said Bob Goldin, executive vice president for Technomic, a consulting firm that works with restaurant companies. �A lot of chains, they hang in there and they�re hard to kill off.�
Consumers, who have generally cut back on the number of meals out since the recession began, are benefiting from the proliferation of zombies. Healthy and failing restaurants alike have been forced to discount relentlessly to lure diners. But for the restaurants, particularly small independent operators, the competition from the undead is a nightmare that just won�t end.
The hard times for restaurants began in 2008, as the recession and staggering unemployment forced Americans to cut back on dining out. During the 12-month period ending in August, the average American ate or got takeout at restaurants 195 times, down from 208 times in 2008, according to Harry Balzer, the chief food industry analyst for the NPD Group.
The industry puffed up like a soufflé in the boom years. Led by quickly expanding chains, the number of restaurants in the country grew by more than 100,000 from 1996 to 2008. By that year, there were 545,678 restaurants nationwide, according to the Bureau of Labor Statistics.
When things turned bad, many analysts said the total number of restaurants needed to shrink by at least 20,000 to bring supply and demand back into balance.
Instead, the number of restaurants kept growing, albeit more slowly.
Sales have taken a beating along the way. For example, at Applebee�s, one of the nation�s largest midprice chains with more than 2,000 restaurants, sales at restaurants open at least 18 months slumped every quarter from mid-2008 through the middle of 2010. The chain�s sales have grown modestly since then, compared with the low level of sales during the recession, but dipped again in the three months ending Sept. 30.
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