The first thing I thought when I heard about Bennigan’s closing was “OK. Now where do I go for a Guinness and a Monte Cristo?” When I got over the initial shock of knowing I could never indulge in this fried delight again (unless home-made, of course), my thoughts moved to “…well what does this mean for the restaurant industry as a whole?” Why did Bennigan’s (and sister-company Steak and Ale) fold while limited-service chains such as Potbelly, Panera, and Chick-fil-A saw drastic growth? In this downturn economy, few industries have been hit harder than the restaurant industry. Rising fuel costs have drastically increased operating expenses while simultaneously slashing the disposable income available to consumers, leading to a sharp decline in the frequency in which people dine out. Most affected by this inflation have been the mid-spectrum casual dining chains, which are losing customers to home-cooking and lower-end fast food establishments.
I recently read an article where Bill Perry, Vice President of Governmental Affairs of the Oregon Restaurant Association, said that food prices rose at a rate of 7.6% last year – a 23-year high – and prices have already risen 8.5% this year as compared with the first quarter of 2007. That is a huge amount of inflation! Unfortunately for us, the restaurant-going public, the costs get passed down to us in the form of higher menu prices.
Restaurants now struggle to overcome both a higher cost of doing business (and lower consumer income) as well as changing consumer tastes just to stay viable. While scrolling through FoodNavigatorUSA, I read columnist Laura Crowley’s take on emerging flavor trends. She says, “Consumer interest in ethical consumerism, including sustainable, organic, local and natural foods, will continue to rise.” As the move towards healthier foods and lifestyle continues to push forward, how can the stereotypical American family restaurant with kitschy décor survive? Keeping in touch with the public’s wants and wishes as well as adjusting expenses to maintain competitive prices will certainly help. In the case of Bennigan’s, a dated menu and excessive overhead lead to its downfall.
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