Some of the country’s once iconic brands — in retail, consumer products and beer — are now shells of their former selves. Some of America’s restaurants, too, are not what they used to be. In the past 10 years, several of the nation’s biggest restaurant chains have lost more than 50% of their sales and have closed hundreds of locations nationwide.
24/7 Wall St. reviewed data provided by food industry consulting and research firm Technomic to determine the 10 large restaurant chains with the biggest decline in locations and sales between 2002 and 2012. Notably, Bennigan’s sales plunged by more than 90% between 2002 and 2012. In 2002, there were 1,688 TCBY’s in the U.S. As of last year, there were just 500.
According to Technomic executive vice president Darren Tristano, many of these struggling restaurants suffer from extremely stiff competition in their segments. The majority of these are full-service restaurants. This segment in particular, explained Tristano, is extremely competitive. Companies like LongHorn Steakhouse, Don Pablo’s, and Fazoli’s, have been hurt by the success of companies like Olive Garden and LongHorn. They have also lost market share to non-full service companies like Chipotle and Domino’s.
Nearly all of these declining restaurant brands face an aging image and business model, Tristano explained. “Today, if you’re not updating your restaurant within, say five to eight years of the previous update, you’re falling out of favor.”
Unlike their competition, these brands have not been able to make these necessary changes. “The underlying issue here is that as restaurants begin to decline, they struggle to have the level of working capital needed to invest in the brand. Once you start to be in a defensive mode, you stop investing in the brand, and you start cutting your losses,” Tristano said.
Brands like Bennigan’s, Fazoli’s, and Tony Roma’s have made serious attempts to modernize and restructure. In some cases, they have added a few restaurants. Their efforts may not be enough at this point. They are certainly nowhere close to where they were a decade ago.
In some cases, these declining restaurants are in segments that no longer have the level of demand they once did. Sales of buffet-style restaurant Ponderosa and Bonanza Steakhouses dropped by 60% as self-serve restaurants have fallen out of favor.
Based on sales data provided by Technomic, 24/7 Wall St. reviewed the 10 restaurant chains that had a 50% or greater decline in the number of U.S. store locations operating from 2002 to 2012. In order to identify the chains that were once the biggest, they had to have U.S. sales of at least $250 million in 2002 and experience a 50% or greater declines in sales over the same period. All sales figures and units are U.S.-only, and are for both company-owned and franchised restaurants.
These are America’s disappearing restaurant chains.