There is a school of thought that says the restaurant business is always a good business — people need to eat. A glance at the sales of many of America’s largest restaurant chains over the past decade quickly dispels this myth. Using data provided by food industry research firm Technomic, 24/7 Wall St. has looked at the ten restaurant chains with the greatest decline is sales from 2001 to 2010. In every case, sales have fallen 60 percent or more.
“Many prominent chain restaurant brands have lost ground with sales over the last decade. As many American consumers gravitate toward a more contemporary dining experience and more exciting menu options, traditional restaurant chains are losing relevance,” Darren Tristano, Executive Vice President of Technomic, told 24/7 Wall St. in an e-mail. “Today’s successful restaurant operator is challenged with keeping their menu fresh, their customers’ experience exciting and their concept contemporary.”
Many restaurants on this list are indeed casual, family dining establishments. The majority offer American Style cuisine — e.g., steak and burgers — in a bar or grill setting. These restaurants, such as Bennigan’s, Ground Round, and Damon’s, expanded quickly during the 1990s. Soon their presence was overshadowed by newer restaurants that consumers found more exciting, like Applebee’s, according to Tristano. Even now, new “fast-casual” restaurants such as Buffalo Wild Wings and Chipotle are outselling, and in many instances replacing, older restaurants.
The majority of the restaurant chains on our list have filed for bankruptcy over the past decade. Parent companies close large numbers of restaurants, as was seen with Ground Round Grill & Bar, Big Boy, and Bakers Square. These bankruptcies have left thousands of people without jobs. They also have, in some cases, lead to restaurant brands changing corporate hands.
Economic factors also contributed to this drop in restaurant attendance at these establishments. The recession has hit restaurants especially hard. Most of the bankruptcies declared by the companies on this list were filed in 2007 or later. When times are tough, small luxuries such as dining out may be cut. And restaurants whose customers no longer value them as relevant or exciting face the worst of this.
These are America’s disappearing restaurant chains.
1. Bennigan’s Grill & Tavern
- Change in sales (2001-2010): -87.9 percent
- Sales 2001: $565 million
- Sales 2010: $68.5 million
- Change in units (2001-2010): -87.5 percent
Bennigan’s is an Irish-themed, casual dining restaurant with locations across the United States. In July 2008, the restaurant filed for Chapter 7 bankruptcy protection. The company closed its 160 corporate-owned locations, laying off approximately 10,000 employees in the process. Of the 138 franchised locations that avoided the bankruptcy filing, only 35 remained as of 2010.
2. Ground Round Grill & Bar
- Change in sales (2001-2010): -81.7 percent
- Sales 2001: $225.25 million
- Sales 2010: $41.25 million
- Change in units (2001-2010): -80.9 percent
Ground Round is a casual dining restaurant chain that serves burgers, steaks, Tex-Mex, and more. It has locations in the Midwest and the Northeast. In February 2004, the restaurant’s parent company declared bankruptcy, immediately ceasing operations at 59 company-owned restaurants on a Friday night before the dinner rush. The 72 franchise locations remained open. Ground Round is now owned by Independent Owners Cooperative, LLC, a group of 30 franchise owners. As of 2010, only 25 Ground Rounds remained in business.
3. Bakers Square
- Change in sales (2001-2010): -72.2 percent
- Sales 2001: $220 million
- Sales 2010: $61.2 million
- Change in units (2001-2010): -69.6 percent
Bakers Square is a casual dining restaurant that, although serving breakfast, lunch, and dinner, is best known for its pies. The restaurant is primarily located in the Great Lakes region and in California. In April 2008, parent company VICORP, now American Blue Ribbon Holdings, LLC, filed for Chapter 11 bankruptcy due to declining restaurant sales and high lease rates. The company closed 56 stores, including the original Bakers Square in Des Moines, Iowa. Only 45 Bakers Square restaurants remain, compared to the 148 that existed in 2001.
4. Damon’s Grill & Sports Bar
- Change in sales (2001-2010): -69.8 percent
- Sales 2001: $284.84 million
- Sales 2010: $86 million
- Change in units (2001-2010): -72.3 percent
Damon’s, which is headquartered in Columbus, Ohio, is an American-style restaurant that “emphasizes prime rib, grilled steaks, chicken, seafood, salad and Damon's award-winning ribs.” The restaurant, which also positioned itself as a sports bar, ran into tough times in 2006 as the quality of home entertainment improved enough to keep sports fans at home. This was an aspect of the business the restaurant depended on. The chain had 137 restaurants in 2001, but only 86 in 2007. The company has begun reformatting its restaurants, altering their interiors, menus, and logo. Today, however, there are only 38 Damon’s.
5. Don Pablo’s
- Change in sales (2001-2010): -69.8 percent
- Sales 2001: $268.25 million
- Sales 2010: $81 million
- Change in units (2001-2010): -70.2 percent
Don Pablo’s is a national chain that serves Tex-Mex-style food. In September 2007, Avado Brands, Inc., the restaurant’s parent company, filed for Chapter 11 bankruptcy. The company sold off a number of its assets, including many buildings that were subsequently auctioned off to other restaurants, such as Buffalo Wild Wings. From 2001 to 2010, the number of Don Pablo’s fell from 131 to 39.
6. Gloria Jean’s Coffees
- Change in sales (2001-2010): -69.1 percent
- Sales 2001: $135 million
- Sales 2010: $41.75 million
- Change in units (2001-2010): -73.6 percent
Gloria Jean’s Coffees was founded in Chicago, Ill., in 1979. By 1995, the brand spread to Australia, where it is a huge success today. In the U.S., the brand, which was owned by Diedrich Coffee, expanded rapidly, reaching 330 locations by 2001. This expansion proved too much for the company, which began to have financial troubles. Diedrich sold off the international segment of Gloria Jean in 2005. In 2006, it sold a large number of cafes to Starbucks. In 2009, Diedrich sold the remaining Gloria Jean’s Coffees to Praise International North America. As of 2010, only 87 cafes remain.
7. Big Boy
- Change in sales (2001-2010): -68.6 percent
- Sales 2001: $580 million
- Sales 2010: $182.25 million
- Change in units (2001-2010): -65.2 percent
Big Boy is the restaurant with the most locations on this list. It is also, perhaps, the most well known. In 2000, the company’s owner, the Elias Brothers Corporation, declared bankruptcy following cash-flow problems and difficulties with expansions. The month before it filed for bankruptcy, the company closed 43 restaurants. The restaurant, which specializes in double-decker hamburgers, has not done very well since. In 2001 Big Boy had 405 locations. By 2010, that number had decreased to 141.
8. Tony Roma’s
- Change in sales (2001-2010): -67.3 percent
- Sales 2001: $318.22 million
- Sales 2010: $104 million
- Change in units (2001-2010): -72.2 percent
Tony Roma’s is a casual dining restaurant that markets itself as specializing in ribs, seafood, and steak. Over the years, the number of Tony Roma’s restaurants has dwindled, largely due to a decline in the brand. On a national scale, the number of Tony Roma’s has dropped from 162 to 45 between 2001 and 2010. However, the restaurant maintains a large international presence.
9. Country Kitchen
- Change in sales (2001-2010): -67.2 percent
- Sales 2001: $250 million
- Sales 2010: $82 million
- Change in units (2001-2010): -74.3 percent
Country Kitchen is a rustic, home-style restaurant that serves self-described “comfort foods.” From 1977 to 1997, the brand was owned by Carlson Companies, which primarily deals with hotels. It is perhaps unsurprising that many Country Kitchens are attached to travel plazas and hotels. Overall popularity of the chain has fallen dramatically, with the number of restaurants dropping from 249 in 2001 to 64 in 2010.
10. Black Angus Steakhouse
- Change in sales (2001-2010): -62.3 percent
- Sales 2001: $302.16 million
- Sales 2010: $114 million
- Change in units (2001-2010): -57 percent
Black Angus Steakhouse currently has 46 restaurants in six Western states. As of 2001 it had 107 restaurants. ARG Enterprises, the restaurant’s former owner, filed for Chapter 11 bankruptcy in 2004 and then again in 2009 before being purchased by Versa Capital Management. Many Black Angus Steakhouses were located in areas that were hit exceptionally hard by the mortgage crisis, causing business to decline significantly.
Copyright © 2012 24/7 Wall St. Republished with permission.