How many restaurant chains face the economic need to close their doors?”
For the first time in nearly two decades, the $550 billion restaurant industry has suffered stagnant sales this year, creating painful cash-flow problems for restaurateurs who can’t get credit lines to cover investment and operating costs even as food and labor costs have risen sharply. That’s made it harder for chains and independent eateries alike to upgrade equipment, hire new staff and renovate facilities. “The credit crisis is having a devastating effect on nearly every segment of the industry,” says Aaron Allen, CEO of the Quantified Marketing Group, an international restaurant-consulting firm. “This is the death knell for a number of restaurant chains.” Aside from those chains headed toward bankruptcy, Forte says those shifting from direct ownership of outlets to franchising them are the most likely to face turmoil going forward. Yum Brands, which owns Pizza Hut and KFC, DineEquity (Applebee’s) and Brinker (Chili’s) all will be tested as potential franchise owners face increasin
