Hard times are on the menu at restaurants
Starbucks, Applebee's and The Cheesecake Factory are feeling the pinch.
— -- The restaurant industry has fallen, and it can't get up. To add insult: The worst may be yet to come.
"Whether or not the rest of the economy is in a recession, the restaurant industry certainly is," says Ron Paul, president of restaurant researcher Technomic.
The financial squeeze is hitting hardest at dinner. Dinner traffic fell 2% last year, says research giant NPD Group. Lunch is slowing, too, says Dave Jenkins, president of NPD's U.S. foodservice business.
Worse, 49% of restaurants surveyed by the National Restaurant Association reported same-store sales fell in January, and 54% said customer traffic fell in January, the fifth month in a row.
"In the lifespan of casual dining, we haven't seen economic times like this," says Marc Buehler, CEO of Lone Star Steakhouse, which just closed 27 of 179 stores.
Evidence of tough times:
•Restaurants are closing. After the Lone Star closings, 1,500 employees lost their jobs. "We're gonna get through this," says Buehler. "But it won't be easy."
Starbucks plans to close 100 low-performing units and will unveil a strategy of key changes at its annual meeting on March 19. Pick Up Stix, a fast-casual Chinese chain, closed 26 of its nearly 100 locations in January.
