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Monday, May 15, 2017

Worst Restaurant Tailspin Since 2009/2010 Crushes Lower End

“The hope that consumer and business spending will surge is probably just that, hope.”

- Joel Naroff, President of Naroff Economic Advisors and TDn2K Economist

So another chain restaurant is “preparing” to bite the dust. Ignite Restaurant Group, which operates the Joe’s Crab Shack chain with 113 locations and the Brick House Tavern chain with 25 locations, and used to operate the Romano’s Macaroni Grill chain with 150 locations until it sold it in 2015, is preparing to file for bankruptcy, “people familiar with the matter” told Bloomberg.

In the quarter ended September 26, 2016, the last quarter for which the company bothered to release an earnings report, same-store sales fell 6.8%; total revenues plunged 10% to $120 million.

A liquidity problem turns into a solvency problem: It had $729,000 of cash and about $26 million of “available borrowing capacity under its current credit facility.” Not exactly a lot, considering that the company lost $15.2 million in Q3, up from a loss of $4 million in Q3 2015.

It had $179 million in liabilities, including $113 million in long-term debt. It shares, which had traded as high as $19 in 2013, have consistently trended lower since, became a penny stock last year, and are now just about worthless (2 cents).

For chain restaurants, it's really tough out there.

Industry-wide, same-store foot traffic fell 3.3% in April year-over-year. For the past three months, traffic is down 3.9%. Same-store sales in April fell 1.0% are down 1.8% for the past three months, according to TDn2K’s Restaurant Industry Snapshot.



Anonymous said...

If they had on in salisbury it would be doing well. People here love chain restaurant crappy food just because it is on TV.

Anonymous said...

You'd think this could be the opening for the rebirth of mom/pop restaurants....but the mom/pop's today are grandparents and I don't see any SNOWFLAKES wanting to really pick up the slack and work.

Maybe its back to TV dinners like in the REAL olden days??? Ugh!

Anonymous said...

And every dolt who wants a new chain to extend to Salisbury does not have a clue.Duh,I want a Cwacker Bawwell,or a Wed Wobbin.And then crowd in on opening week like a bunch of idiots,and then stop going altogether.

Anonymous said...

Every weekend my wife and I look at each other trying to think of a good place to go out and eat, We can never think of one and settle for whats closest.

Anonymous said...

Excessive taxation crushing businesses along with slowed consumer spending.

Anonymous said...

No matter what kind of restaurant it is,most folks like an adult beverage or two and it's way to risky now.

Anonymous said...

4:16 maybe in your world. Restaurants are packed here in Miami. $25 guacamole made table side and $125 steaks. Need reservations a month in advance.

Anonymous said...

Too expensive, some of the food is too rich or fattening,and we get tired of the same old ingredients reworked into weird dishes..sometimes the food is obviously cooked by people who can't cook.