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

[domicile]

That's not food! Most of those are selling poison.

[Goliadkin]

Fast Food = Slow Death. (8]X

[MelloY]

Breathing = slow death too.

[vandegrasse]

Actually fast food is fast death. Look at some of these kids with diabetes!

[cplKlyde]

Those are not restaraunts they are stores. I feel bad for the employees if they do go under but the truth is we are saturated with coporate food stores. Other than color of the signs there is no difference between Bennigan's Applebee's Ruby Tuesday and the rest.

[rlwesty]

Feel bad for the employees? Yes. But your use of the word "saturated" should not go unnoticed. The elimination of all of these purveyors of fats and sugars would relieve more suffering than it would cause.

[BPCentrisAmerican]

I've always tried to avoid restaurant chains, if I want real Italian or Mexican which I love, I try to get the real thing. On a ski trip to the Lake Tahoe basin, my party found a real mom and pop Mexican cafe, unbelievable. I used to fly to Texas a lot for work and real Tex-Mex was always treat, just ask a local.

[Goliadkin]

Try the Mexican Cantina in Willard, New Mexico. It's like going back 50 years in time.

[JFaye]

Many of these employees may find themselves with the opportunity to open local restaurants and hopefully market a healthier version of what the corporate chains manufacture and sell...

[propitiousmoment]

yeah, right, on what restaurants pay?

[Acidic]

Healthy food means expensive food means no customers to eat the food means out of business.

[loisinthepink]

It's all corporate food....right along with Chilis, Applebys, Olive Garden, Outback, Cheese Cake Factory etc. If I go out to dinner, and it is not often, I always go to something local where the food is more likely to have been made with imagination and fresh food.

[AlexFTW]

Exactly. You find them in every Mall-istan in the country. Good riddance.

[SCboy]

Last time I went to a Krispy Kreme was about five years ago. Wanted two donuts and a coffee. There were four or five employees behind the counter. There were two lines each with two customers. I stepped into one line as the third. Mind you now, the first person in each line was being waited on at that moment. After ten minutes and no donuts and no coffee I left and have not been back since.

[justmeinAz]

I take issue with Krispy Kreme being classified as a restaurant.

[ladyvader]

Me too.

[cjks]

I love KK but I do not go there anymore. Why they distribute to every grocery and gas station and anywhere else that will take their product is beyond me. They have destroyed their product appeal.

[brovold]

I once worked with a guy who had been a regional manager for Pizza Hut, who felt they had done pretty much the same thing with the all-you-can-eat buffet that they used to have--that is, it made the stores money in the short run, but permanently cheapened their image. "Penny-wise, pound-foolish" as the kids would say.

[Lion24]

There's always "Al's French Frys," South Burlington, Vermont and "The Buttery," Sarasota, Florida.

[kareemachan]

Inn at Ship Bay, Eastsound, WA. Absolutely the best local restaurant in the county!

[kareemachan]

And may I brag that San Juan County (WA) has NO fast food restaurants by choice. We voted on it.

And no stop lights, but that's another story.

[stateretiree]

I knew there was another reason I wanted to move back to Washington State!!

[ramal]

Anyone over 50 years of age will remember when going out to a restaurant was a rare treat. Americans need to stay home and relearn how to cook simple, honest food. Their pocketbooks and their bodies would thank them.

[cplKlyde]

And maybe save their bucks for locally owned and operated restaraunts.

[drymartini1]

whats the difference between giving your money to locally owned shop and a chain. If i am giving my money away either one is same. if i am at home cooking then thats great, i save money.

stop eating out !!

[ADVOCATE4ZPG]

Why are "Murkans" so keen on FRANCHISED food "stores" at all? Can't small "communities" teach their own members how to cook? Why is the UNIFORMITY of the offering so appealling?

[juanchopancho]

Idiocracy

[MsInformed]

You like lattes too?!?

[Dystopic]

what do pubic wigs have to do with food???

[jpehrlich]

Torture: KK opened an outlet directly across the street from my gym on High Holborn in London. The only thing that kept me out of there was the expense. Each donut cost one pound and the exchange rate was $2. dollars to the pound. No way could I justify a two buck piece of sugar.

[jukesgrrl]

Eat a piece of toffee and it won't be as sweet as a KK. They have so much sugar they actually made me shiver the one time I ate one.

[uberdorker]

Krispy Kreme would have been a resounding success if only they had recognized how amazingly crappy their coffee is. Like bitter dishwater. Seriously, if any KK execs are reading this you guys need to get better coffee and quit serving half and half only--some of us like whole milk or skim in our coffee.

[brovold]

They also used to sell fresh milk by the pint and then switched to (relatively) crummy packaged version. I didn't even know the coffee was underwhelming. Why in the world would the world need another Dunk 'n Donuts? One is already one too many!

[timnel]

So true I would always go for their donuts but even the gas stations have better coffee

[jpehrlich]

Whew! I am on a diet and when I saw the lead photo of the Krispy Kreme's under the "May be going bankrupt" headline I almost stroked! KK is not exactly a restaurant but if it goes under where will cops go between midnight and dawn???

[chitown8]

KRISPY KREMES is no longer in Chicago. Sad day indeed!

[ohjodi]

Dunkin' Donuts runs circles around KK. KK is the worst donuts I've ever eaten. Scratch that....I've never gotten beyond two bites, bleh! And I'm a fat chick who lives on donuts!

[MelloY]

Dunkin' Donuts are cardboard in comparison to KK.

[ladyvader]

That must be your taste buds, because everyone I know would rather have a KK donut over DD

KK is like crack, one bite and you want more.

[jukesgrrl]

Again, doughnuts are another product that can be made locally and do not need to have a corporate logo applied to them to make them edible.

[wakeup804]

All of these places sell food that will clog your arteries. We should miss them why?????

[MelloY]

Umm, a lot of us like foods that colg our arteries. There's more to life than just eating twigs and berries.

[rob roy]

I never once ate at Bennigans until I moved to Korea. I have been here for few months and there is unfortunately a Bennigans at every major city I have been to - which means it is an option for groups of expatriates to eat at.