FESmag

Joseph Carbonara

What Will Butters Say?
July 30, 2008

In one particularly memorable episode of the animated television series “South Park,” a character named Butters displayed considerable excitement about his annual visit to Bennigan’s to celebrate his parents’ wedding anniversary. When news that approximately 150 Bennigan’s were permanently closing yesterday due to the parent company’s filing for Chapter 7 bankruptcy reached me, I began to wonder where Butters’ family will mark other similar occasions in the future.

Luckily for Butters and other consumers, there appears to be no shortage of casual-dining options available to them today. In fact, consumers may have too many choices when it comes to casual dining. According to Technomic, the top 20 casual-dining chains in the same category as Bennigan’s had unit growth of 45 percent during the most recent five-year period, which far outpaced demand.

“These restaurants share many subtle and complex challenges that extend beyond this difficult economic climate,” said Ron Paul, president of Technomic in a release the company issued this morning. “To some extent they (meaning casual restaurant operators) have become victims of their own success – a mature category with too many units and not enough differentiation, at least in the eyes of the customers.”

There’s little doubt in my mind that the reported success of fast-casual and limited-service restaurants will continue to put the squeeze on those companies that operate in the casual segment. Eating meals prepared away from home may be ingrained in our culture but that will not stop budget-conscious consumers from looking downstream or for other alternatives to save a few bucks on beverages, tips and the like. That’s why casual-dining companies like Chili’s continue to tinker with their value proposition to include some alternatives, such as take-out, that allow them to weather the economic realities of the day.

In the case of Bennigan’s, what struck me was not so much what happened but how it actually went down. The fact that it happened so fast with so little warning is what’s most stunning in this instance. And the fact that Metromedia Group has so little to say on the matter just adds to the aura of intrigue surrounding this development.

Still, every market condition benefits someone. Some Bennigan’s units, like the two shuttered restaurants on Chicago’s Michigan Avenue, occupy decent real estate. So in this case, any restaurateur that has a stable balance sheet and market position and thoughts of expansion might be able to take advantage of these addresses.

Posted by Joseph Carbonara on July 30, 2008 | Comments (3)