America's Disappearing Restaurant Chains

In the past 10 years, some of America's biggest food chains have lost more than 50% of their sales as they closed hundreds of locations nationwide.

These restaurants, which include former American staples such as Big Boy, Ponderosa and Bennigan's have not been able to maintain a steady crowd. They have failed to update their brand or menu options. As a result locations have been closed in favor of a new generation of eateries. Based on data provided by food industry consulting and research firm Technomic Inc., 24/7 Wall St. reviewed the 10 large restaurant chains with the biggest decline in locations and sales between 2001 and 2011.

Restaurant brands are facing new challenges, Darren Tristano, Executive Vice President of Technomic, told 24/7 Wall St. in an interview. "What's happening today is that the contemporization of restaurants is creating a new breed, a new generation of restaurant in a competitive environment." The struggling brands, which "tend to be older in nature," Tristano said "have not kept up with current generations, or have been dominated by new competition within the segment."

The type of cuisine these restaurants offer has also played a major role in their decline. In the case of barbecue establishments such as Damon's and Tony Roma's, competition isn't the problem. Rather, the barbecue segment as a whole is performing poorly because its a necessarily limited cuisine. Tristano explained that this is in large part due to the fact that barbecue typically tends to attract male customers more than women. It also isn't a meal diners tend to eat every day. Tony Roma's sales declined by more than 70% between 2001 and 2011, while Damon's sales fell by more than 75%.

Other chains are in segments that are doing fine, but the restaurant is losing out to newer chains with exciting brands and new offerings. TCBY, the frozen yogurt chain that experienced meteoric growth starting in the 1980s, has been cooling off for years. Traditional ice cream chains such as Coldstone Creamery have eaten into its sales, as have new frozen yogurt establishments such as Pinkberry. In 2001, there were 1,777 TCBY locations across the country. By 2011, there were just 405.

Many of the restaurants on our list saw their heyday come and go several decades ago. Of the 10 chains with the biggest declines, eight have filed for bankruptcy in the past decade. In some cases, hundreds of locations were closed overnight. The chains were either then purchased or resumed operations only once the company emerged from bankruptcy. The remaining franchises continued to operate. But reinvigorating these brands will be an uphill battle.

The recent economic recession has further made the recovery of these brands challenging. While it is clear that actively pressing into new markets is necessary to keep these restaurants growing, these chains have been forced to devote most of their resources just to remaining afloat. Tristano explained, "The economy's been a big negative for these restaurants trying to gain traction or even grow, and so in many cases they've actually just continued to struggle and close units that were underperforming."

Based on sales data provided By Technomic, 24/7 Wall St. reviewed the 10 restaurant chains that had 60% or greater declines in the number of actual store locations operating from 2001 to 2011. In order to identify the chains that were once the biggest, restaurants had to have sales of at least $225 million in 2001 and experience 50% or greater declines in sales over the same period.

Filed under: 24/7 Wall St. Wire, Food Tagged: featured