On the Margin

Five shrinking restaurant chains

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This post is part of the On the Margin blog.

In 2006, when Minnesota-based Buffets Inc., merged with South Carolina-based Ryan’s, the resulting company had 675 locations and a stranglehold on the U.S. buffet business.

Two years later it was in bankruptcy. The recession happened, and the company found itself in bankruptcy again in 2012. Four years, a major remodeling project and a sale of the company later and the company has filed for bankruptcy a third time.

Each step of the way, the operator of Old Country Buffet, Ryan’s, HomeTown Buffet and Country Buffet closed locations, but none more so than the past month. Ovation, known in legal filings as Buffets LLC, has closed 166 locations in two massive purges since February. Moving trucks hauled away equipment to be liquidated before landlords could padlock the doors.

The buffet operator is now down to 150 locations. That’s a unit count decline of 78 percent in just eight years.

That decline makes it among the worst of its kind in restaurant industry history, and brings to mind other chains that suffered through steep unit count declines. Here are some notable examples, though the list is far from complete, and one or two are adding locations again.

Roy Rogers: Named for the cowboy movie actor, Roy Rogers reached 650 locations at its peak in 1990 when it was sold to Hardee’s, which converted many of the locations and sold others to rival restaurant chains. It was ultimately sold to franchisees and continues to operate today and operates about 50 locations and is working on growing again.

Chi Chi’s: The Mexican chain was founded in 1975 and quickly grew to 210 locations but was undone by financial problems and a severe hepatitis outbreak. The chain still exists in parts of Asia but doesn’t exist in the U.S., outside of licensed products in grocery stores.

Burger Chef: This is an old one. Based in Indianapolis, it had over 1,000 locations serving flame-broiled hamburgers at its peak in the 1970s. But the chain struggled, franchisees revolted, owner General Foods closed a bunch of stores and sold it to Hardee’s in 1982. The final location closed in 1996, making it one of the rare true deaths of a restaurant brand.

Bennigan’s: This chain announced the decline of the casual-dining sector when it filed for bankruptcy in 2008, padlocking 150 company-owned locations, shutting down more than half of its domestic unit count in the process. Owners of many of the remaining locations closed in subsequent months. The chain currently has 75 locations, but has been working on a comeback behind CEO and owner Paul Mangiamele.

Quiznos: We would be remiss if we didn’t mention Quiznos. The chain was a hot franchise investment in the early 2000s, rapidly gaining popularity thanks to its quality sandwiches and unique advertising. But severe financial problems on the part of its franchisees led thousands of them to close. In 2006 the chain had nearly 5,000 U.S. locations. That is now down to less than 1,000.

While a couple of these chains are no longer, others are working on comebacks. Likewise, chains such as Boston Market and Krispy Kreme surged and then had quick downfalls before ultimately recovering. So restaurant chains in even these difficult positions can find growth again.

Contact Jonathan Maze at jonathan.maze@penton.com
Follow him on Twitter at @jonathanmaze

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Jonathan Maze follows the money

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Jonathan Maze

Jonathan Maze covers finance for Nations Restaurant News, as well as restaurant chains based in the Midwest. Jonathan came to NRN in 2014 after seven years covering restaurants for Franchise Times...
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