More Bad Economic News: Vanishing Customers Cause Restaurant Chain Closures

And the bad news goes on and on in the latest manifestation of the Clinton recession the mental recession the economy’s accelerating decline under the Bush administration: now some restaurant chains are closing, adding to the list of big corporate stores that are biting the financial dust:

Several national restaurant chains were shuttered on Tuesday, possibly offering an early taste of what’s in store this year for businesses that depend on free-spending consumers whose budgets are now being squeezed.

The parent company of Bennigan’s, an Irish-themed bar and grill with about 200 sites across the country, filed for bankruptcy, a move that will put hundreds of employees out of work and leave many landlords with empty retail space during a painful time in the real estate market.

A sister brand, Steak & Ale, will also close. Franchise units of Bennigan’s will remain open for now, a spokeswoman, Leah Templeton, wrote in an e-mail message.

The restaurants are the latest casualties in the so-called casual dining sector, considered a cut above fast food. Soaring food costs and a surfeit of locations have hurt the companies’ bottom lines just as Americans are choosing to take more meals at home.

The closings are “something we’re going to see more of over the next 6 to 12 months,” said Amy Greene, a director at Avondale Partners who tracks the restaurant industry.

The San Diego Union-Tribune notes that its reporter learned that not all franchises are included in the bankruptcy filing (for instance the store in San Diego is not). And the Times story quoted earlier further notes that the problems are the economy, coupled with the concept for these restaurants, which have made them expendable in an economy where financially-strapped consumers have to make tough choices.

But the Times piece also notes that this latest bit of bad news is part of a larger tapestry of corporate closings. Some other big companies it lists that are in economic agony:

–Mervyn, the department store chain, which has just filed Chapter 11 bankruptcy which allows it to reorganize.
–Linens ’n Things
–Sharper Image
–Ann Taylor’s

And the Times notes that all of this makes the trickle down impact even worse:

The closings, especially of popular outlets that expanded quickly in the last few years, will leave commercial property owners in a tight spot, analysts said.

“It’s not going to be easy to replace a tenant at this time, given the status of the industry,” Mr. Goldin, of Technomic, said. “It’s much trickier when you have to retrofit the whole place to fit in another kind of retailer.”

And Ms. Greene, of Avondale Partners, said that financing was also starting to dry up for ailing restaurant chains. “Banks have become less willing to lend to restaurants and franchisees,” she said. “The business fundamentals just do not support it right now.”

As business fundamentals are not supporting an expanding list of many things right now…

UPDATE: But there is today one bit of good news for the White House, the U.S. and the world:

The sharp drop in energy prices since the beginning of the month is turning into a rare bright spot in a bleak economic landscape.

For the moment, at least, fears of a prolonged energy shock seem to have subsided a bit.

Oil has fallen more than $23 a barrel, or 16 percent, since peaking on July 3. Gasoline has slipped below $4 a gallon and is dropping fast as Americans drive less. Natural gas prices, which had risen the fastest this year as traders anticipated a hot summer, have fallen 33 percent since the beginning of the month.