Full-Service Restaurant Sales & Traffic Slump

Restaurant

Logan's Roadhouse has filed for Chapter 11 bankruptcy protection.

That July slowdown you may have noticed? It’s for real.

Although overall economic news that generally tracks restaurant traffic has been mainly positive, July’s numbers were down again. Same-store restaurant sales dropped 1.4 percent and traffic dropped 3.9 percent. This is according to TDn2K's Black Box Intelligence, which scored roughly 25,000 restaurant units representing $64 billion in sales.

It’s the weakest performance since December 2013, although same-store sales have slipped an average of 0.25 percent per month since January 2015. Casual-Dining seems to have taken a slightly larger hit, although even Fast-Casual was down this time. In fact, only Quickservice finds things looking up.

Perhaps this has all led to some recent shake-outs. Last week, Ruby Tuesday announced it would close about 15% of its company-owned restaurants by September. The Tennessee-based Casual-Dining operator revealed this development in an earnings release last Thursday. As of the end of the fourth quarter, Ruby Tuesday had 646 company-owned restaurants in its system of 724 units. This follows news that an Illinois Ruby Tuesday franchisee closed 11 units in July, and that the chain is selling the last of its Lime Fresh Mexican Grill restaurants.

There was worse news for the owners of the Fox & Hound and Champps Kitchen & Bar restaurant chains. They filed for Chapter 11 bankruptcy protection last week, about two-and-a-half years after their previous parent also went through bankruptcy.

Last Call Guarantor, LLC and several affiliates listed debts of up to $500 million against assets of up to $50 million. Last Call operates 80 sports bars and casual dining restaurants in 25 states under three different names: 48 Fox & Hound restaurants, 23 Champps, and 9 Bailey's Sports Grilles.

This follows Logan's Roadhouse’s filing for Chapter 11 protection last week as well on Monday. Logan’s Roadhouse claims more than $400 million in debt and is looking at potentially closing some of its locations.

Many observers have wondered when the traffic and sales turnaround would take off, given the otherwise good economic news in terms of employment. Such news is usually a key indicator for the Casual Dining segment (and all restaurants, in fact). But whatever upswing can be expected, it may be too late for some chains which have seen check averages, customer averages, and beverage sales sag along with traffic and total volume. Are there too many operations that are too similar to each other? That’s a claim that analysts have been making for some time, and when neither food nor drink attracts customers to your store, that’s no way to run a restaurant business.