Sbarro's, Krispy Kreme Among The Most Vulnerable Restaurant Chains

It's been nearly a year since Bennigan's filed for bankruptcy, and now US News & World Report examines some other food chains that may be vulnerable to the deteriorating economy. Searching data from Standard & Poor's, the magazine isolated those companies that met two criteria: a credit rating of B or lower and a negative outlook.

Among those it highlighted was Perkins, which has about 500 locations. While it has cut food costs, its revenue has still fallen $9.7 million in the first quarter of this year. With market share of only 8%, the restaurant chain told US News & World Report that it has cut expenses by $7.3 million, delayed some remodeling and called a halt to expansion.

Another company that could be at risk is Sbarro's. The pizza chain's 1,070 locations are mostly located in hard-hit malls, which helped contribute to the company's $5.7 million loss in the first quarter. It has also seen much of its cash flow go to paying off interest on its debt. Christmas season--which makes up about 40% of its sales--will be an important factor in how it does this year.

Captain D's is another chain, mostly located down South. With nearly 600 restaurants and a tag line that reads--"sit down food at fast-food prices"--would fit in this era of belt-tightening. Still, US News & World Report says it is carrying too much debt.

Krispy Kreme is busy closing unprofitable locations in a bid to reverse years of losses. And even though its revenue has plummeted since 2005, it did manage to post a $1.9 million profit in the latest quarter. A spokesman told US News & World Report, "We sell an affordable indulgence consumers will purchase when they can't afford to treat themselves or their families to other luxuries."

Mastro's are mostly found in Arizona and southern California, two areas of the country that have been most severely impacted by the housing bust. The steakhouse lacks geographic diversity, and sales have fallen as customers pinch their pennies. It has scaled back expansion plans in the wake of the downturn, with plans to open just four new restaurants by 2012.

Quick Poll

Which restaurant's survival is most at risk in this economic climate?

Perkins

Sbarro's

Captain D's

Krispy Kreme

Mastro's Steakhouse

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It’s been nearly a year since Bennigan’s filed for bankruptcy, and now US News & World Report examines some other food chains that may be vulnerable to the deteriorating economy. Searching data from Standard & Poor’s, the magazine isolated those companies that met two criteria: a credit rating of B or lower and a negative outlook.

Comments

[KarateKid]

Krispy Kreme is a real puzzler. When there were only a few stores, people would go to great lengths to get them, even carrying them on planes to relatives who were demanding them. Then, one day, they expanded their franchises and when they became easy to obtain, the chains' business went dead. Go figure. The one near where I lived in Illinois had empty parking lot for months before they shut down.

[roger54]

Take back the trillions of $$$ given to the banks, who just sit on it and make it totally ineffective then start government incentive to create realistic industries that give employment and generate real productive income, some of which would hopefully be from exports.

Every other country, especially China and most of Europe have goverment incentives to protect it's industries. No matter what you call it it's a form of protectionism and its inevitable. We should stop being naive and take care of our own house. The only ones who win if we don't are the multinational corporations who don't care where they get their hand out.

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[PalaceOfWisdom]

I have tasted Krispy Kreme twice. Each time I spat out the bite I took. People rave so much I figured the first time I just got a bad one. Nope, it's apparently meant to taste like a deep fried hockey puck rolled in sugar. I don't wish job loss on anyone, but our collective health would be better without them. What's the point of indulgence if it tastes awful anyway?

If you're in Chicago, Huck Finn Restaurant has the best donuts.

[trunk65]

I'm sure the Krispy Kreme stores in Rush's neighborhood are doing well.

[BobABooey]

I'm surprised that most of these chains made it this far. I mean who is eating at Perkins ???
This food is crap, these businesses will NOT be missed, except Krispy Kreme of course : )

[Cryostatic]

Hmm, Sbarro's closing would be a shame. Tasty stuff, that. Couldn't care less about KK, all their locations closed up around here a couple of years ago. Seems doughnuts don't sell very well without espresso to wash them down with.

[Matt McInnes]

Trans fat full of msg!!! do not buy this s**t it is VERY bad for you especially if you eat a lot of similar or fast food!!

[rekk]

Good, let's get rid of all this mass-produced stuff. They don't treat their employees well and the 'food' they serve is as low as they feel they can get away with. Hopefully after this crisis, people will shop at their local grocer and the families who live on the farms will own them again. Even out all this over indistrialization.

[AirViceMarshalPark]

I, no longer, have anything to do with fast food crap or chain restaurant crap.

We have 5 really good taquerias for quick, cheap Mexican food, all family owned. There is a family owned Chinese restaurant...very good. A casserole shop will whip up whatever you want for dinner. There is a dressy Mexican restaurant for your Saturday night date and a French bistro out in the country. There is a local hotel with to-die-for buffets and even a veddy British chippery. This is all in a town of 30,000 people in the middle of Texas.

What the hell do we need with the poison served at McD's or Wendy's or Cici's or Burger King or Pizza Hut or Domino's or (shudder) Dairy Queen. One of these places has been closed by the health department in the past few years.

To hell with the chains. The locals, typically, have very long term employees who are paid more than the fast food crap-joints, too.

[scpatl4now]

There is nothing in this world as good as a hot Krispy Kreme Donut hot off the conveyor belt. I love when the "hot now" light is on...that is the only way to truly eat them

[stagebandman]

I am already depressed about the Krispy Kreme stores closing in the Chicago area. They oversaturated the market here, and now I can't buy fresh donuts there. What a shame.

If they close up shop it would be a real waste of a great product. Here's hoping they stick it out...
and reopen the Chicago stores.

[punkindmb]

We have a better donut chain here in Houston. Its called Shipleys and their donuts beat KK hands down. KK didn't last very long down here because most of us were used to the superior taste of Shipleys.

[adamginsberg]

Here's what we know - Krispy Kreme is over priced. And Krispy Kreme has grown way too fast...however the chocolate glazed donut is deliciously - and tastes even better with a glass of cold milk.

While Krispy Kreme donuts are very healthy - they occasional stray from a healthy diet is okay as long as it's not too often.

From a business perspective, they might be better off with less locations...as long as they don't close down at the Sydney and Melbourne Airports!

[Bob48Burg]

I'm assuming you left out "not" in the statement, "While Krispy Kreme donuts are very healthy. . . "

[KarateKid]

I, for one, am glad the chains with mediocre product are all going down. I travel the country on business and frankly, every place looks the same because of all these chains. I look for family owned restaurants, which are all thriving. It's about time Americans got sick of all this same cr@p.

[Gasparilla]

Hot or cold, Krispy Kreme is not that good.

[Gene Colvin]

You guys are right, fast food, and especially Krispy Kreme, is death. But you gotta admit, they taste so damn good! Especially when the orange light is on in the window that tells you they have some hot ones coming right off the line.

I used to be pretty bad when it came to donuts, fast food, etc. As a matter of fact, the manager at our local Krispy Kreme actually knew my name. But I had to get in control and give them up. I've lost 50 lbs, and my wife won't let me anywhere near that place nowadays. But even though I don't patronize them anymore, it would be sad to see them go out of business.

Come on America!-the orange light is calling you....

[5hy56]

both need help. badly

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[NoToGOP08]

Its all Food, Inc. Let them all close. I just ate at my local pizzeria.