Restaurants Look To Franchising For New Energy
This year, a number of familiar restaurant brands are paying the price for consumer cutbacks in dining out.
Bankruptcy filings by operators of familiar chains like Bennigan’s, Bakers Square and Mrs. Fields Cookies are closing hundreds of locations and returning space to the market. Meanwhile, other casual restaurant chains like Pizzeria Uno, Ruby Tuesday’s and Applebee’s are struggling.
Industry experts expect little relief anytime soon: Hudson Riehle, the National Restaurant Association’s chief economist, told that the restaurant business faces its toughest climate in nearly 30 years. One-third of operators expect their sales to drop year-over-year over the next six months, and only 30 percent expect sales to rise during the same period.
In light of these trends, restaurant owners are delaying plans for capital expenditures. According to the association’s latest survey, a record-low 43 percent of operators expect to invest in expansion, equipment or remodeling during the next six months.
But even in this climate, some players are finding opportunity, and franchising may generate much of the demand for new space.
That may help breathe new life into even troubled brands like Bennigan’s. More than 300 outlets owned by its parent, S&A Restaurant Co., closed suddenly after S&A filed under Chapter 7 of the U.S. bankruptcy code in July. But another 132 locations franchised separately by S&A affiliate Bennigan’s Franchising Co. stayed open. More.
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