America’s Disappearing Restaurant Chains

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5. Fazoli’s
> Pct. decline in restaurants: 44.3%
> Decline in restaurants: 178
> Total restaurants: 224
> 2012 sales: $207.4 million
> Pct. decline in sales: 50.6%

The first Fazoli’s, a quick-serve Italian restaurant, opened in Lexington, Kentucky, in 1988. Between 2002 and 2012, the number of restaurants in the U.S. fell by 44%. In 2012, the company attempted to improve floundering growth rates with a restructuring plan that included a new restaurant layout and the introduction of real plates and silverware. Next year, Fazoli’s plans to introduce a new fast-casual concept that emphasizes self-serve. Such efforts have improved sales somewhat — there were seven more restaurants in 2012 compared to 2011, but the chain is still nowhere near where it was. According to Technomic’s Tristano, the chain is struggling because of extremely strong competition in the fast casual segment. “The competition that is coming from Olive Garden in full-service and certainly the effort that Domino’s has made to have higher-quality pizza is really eating away at some of the company’s success.”

4. Bennigan’s
> Pct. decline in restaurants: 87.7%
> Decline in restaurants: 250
> Total restaurants: 35
> 2012 sales: $62.0 million
> Pct. decline in sales: 90.4%

Bennigan’s, the pub-themed restaurant chain, was founded in 1976 in Atlanta by Norman Brinker, founder of several other restaurant chains such as Chili’s and Steak and Ale. For a time, it was one of the nation’s iconic restaurant brands. However, an increasingly outdated brand resulted in a massive sales decline nationwide. When parent company Metromedia Restaurant Group filed for Chapter 7 bankruptcy in 2008, all 150 corporate stores were closed. Some of the company’s franchises remained in business but suffered without corporate support.

Recently, however, Bennigan’s has tried to make a comeback, introducing new strategies such as catering, and opening a few new stores. Bennigan’s has signed agreements with five new franchise partners. According to Tristano, however, with weaker restaurants continuing to shut down, the company’s improvements have not been enough. As of 2012, U.S. sales were down $584 million from 2002, the biggest drop in sales out of the restaurants reviewed by Technomic. “They have tried to rebuild the prototype that’s more contemporary and on-target with trends. But to date, it really hasn’t blown the doors out or grown. They just continue to see some of the weaker links in the chain fall off and close down.”

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3. Don Pablo’s
> Pct. decline in restaurants: 67.5%
> Decline in restaurants: 81
> Total restaurants: 39
> 2012 sales: $81.6 million
> Pct. decline in sales: 67.5%

Don Pablo’s offers full-service Mexican fare. While Mexican food is very popular, this may be part of Don Pablo’s problem. According to Technomic’s Tristano, “[Don Pablo’s] hasn’t done anything to distinguish itself in a sector that is highly competitive.” As a result, fast casual restaurants like Chipotle and Qdoba Mexican Grill have outpaced Don Pablo’s. Avado Brands, which owned Don Pablo’s, filed for bankruptcy in 2007. In 2002, there were 120 Don Pablo’s restaurants in the U.S. By 2012, there were just 39. In that period, sales fell by over 67%.

2. Lone Star Steakhouse
> Pct. decline in restaurants: 55.6%
> Decline in restaurants: 140
> Total restaurants: 112
> 2012 sales: $192.0 million
> Pct. decline in sales: 60.1%

First opened in 1992, Lone Star Steakhouse is currently owned by Texas-based private equity firm Lone Star Funds. Between 2002 and 2012, Lone Star Steakhouse U.S. sales fell by $289 million, the fifth largest drop among restaurants reviewed by Technomic. Lone Star has suffered from tremendous competition. Competing restaurants in the $12-to-$20 steakhouse segment such as LongHorn and Texas Roadhouse, explained Tristano, have continued to absorb Lone Star’s share of the market. “That growth has stolen share away from Lone Star, and put them in the position they are in today, which is undercapitalized, and closing units that are underperforming,” explained Tristano.

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> Pct. decline in restaurants: 70.4%
> Decline in restaurants: 1,188
> Total restaurants: 500
> 2012 sales: $98.0 million
> Pct. decline in sales: 61.2%

TCBY, short for “The Country’s Best Yogurt,” opened its first shop in Arkansas in 1981. In 2000, TCBY merged with Mrs. Fields, becoming Mrs. Fields Famous Brands. Eight years later, however, the cookie retailer filed for bankruptcy. Technomic’s Tristano noted that the company’s decline can be explained by competition from new brands like Pinkberry, and more premium brand companies like Haagen-Dazs, Ben & Jerry’s, and Coldstone. TCBY operates under a franchise model, which has allowed local store operators to experiment with new store models. In 2010, for example, one TCBY franchise owner introduced a self-serve model, which boosted sales and has since been embraced by many other franchises. Between 2011 and 2012, the number of U.S.-based TCBYs increased by 95. The improvement, however, has barely been a blip in the company’s overall downward trend in the country. Between 2002 and 2012, the number of TCBY U.S. stores declined by 1,188, by far the largest drop among companies reviewed by Technomic. Tristano noted that “some of these new TCBYs are co-branded into Mrs. Field’s, so they aren’t necessarily full units.”

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