Consumer Reports: Chain Restaurants Closing?

Note: Consumer Reports has no relationship with the advertisers on this site.

A new study by AlixPartners, an international business advisory firm, suggests that up to 40 percent of the nation’s chain restaurants could be fighting for their very survival within the next 12 months.

The startling study reveals that many chains are taking a beating as a result of a combined one-two punch of fewer diners spending less money and massive debt. AlixPartners’ analysts described the plight of the industry as worrisome, citing low-price, quick-service eateries as the lone bright spot.

Experts I spoke with for the latest version of our popular Chain Restaurant Ratings report (look for it in the July issue of Consumer Reports and online in early June) said total restaurant sales are down around 6 percent from a year ago, with fancy, fine-dining establishments hurting the most (sales are off by 15 percent).

AlixPartners studied 110 restaurant chains across four main categories: fine dining, casual dining (eateries with lower prices but that still offer full table service), fast-casual dining (those with no table service but with the promise of a higher quality of food and atmosphere than a fast-food restaurant) and quick-service restaurants (where food is ordered at a walk-up cash register or at a drive-through window).

The firm also surveyed 1,000 consumers about their recent dining habits and expectations for future spending. Almost half (48 percent) of respondents said they plan to eat out less frequently in the coming year. More than half (51 percent) predicted they would spend an average of $10 or less per meal. When asked the same question in 2008, 42 percent of those surveyed they planned on spending $10 or less.