Kathryn Rem: Expert says market drove Bennigan's bankruptcy
One person who wasn’t surprised by the sudden bankruptcy filing last week of the Bennigan’s Grill & Tavern chain was Ron Paul, president of Technomic, a Chicago-based research and consulting company for the food-service industry.
Casual-dining chains like Bennigan’s, Applebee’s, T.G.I. Friday’s, Chili’s, Ruby Tuesday, Buffalo Wild Wings and others have been growing faster than demand for their often indistinguishable menu items, he said.
“The problem is that they are all very much alike. They have similar menus and advertising. In focus groups, consumers often remember a commercial, but not who ran it,” Paul said.
He said the ubiquitous restaurants have “become victims of their own success — a mature category with too many units and not enough differentiation.”
Sameness is just one problem faced by chain restaurants. Add the cost of gasoline, high interest rates, rising food prices, poor consumer economic confidence and increasing competition for ready-to-eat meals from supermarkets, and it’s not hard to see why restaurant traffic is cautiously stalled at a yellow light.
Paul advises his restaurant clients to offer a “craveable” item, a signature dish that sets it apart from competitors. Chili’s has baby-back ribs, for example; California Pizza Kitchen has gourmet pizzas; and Cheesecake Factory has a broad menu as well as cheesecake.
Creating some heat also helps, he said.
“When the chain can also layer in excitement through new or limited-time offerings, they help create an environment where consumers want to come back. A good experience can generate all-important buzz around the concept.”
Casual-dining chains have grown by 45 percent over the past five years, according to Technomic. Paul predicts the chains will close stores and slow down the opening of new locations.
Expansion, he said, is “absolutely coming to an end. It used to be you’d build it and they would come. Now they build it and ask, ‘Where are they?’”
Food editor Kathryn Rem can be reached at 788-1520 or firstname.lastname@example.org.