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Published byCaroline Stephens Modified over 9 years ago
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Hunger Pangs Restaurants Fell Sting Of Surging Costs, Debt Team USA
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Causes: Tightfisted consumers Scarce credit Surging commodity prices Minimum wage boost As much as 12% in some states
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Business Solutions: Scaled back expansion plans No extra sauce or free sour cream Shuttering sites Laying off workers
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Impacted Businesses: Vicorp Filed for bankruptcy this month McDonald’s Corp. U.S. sales fall of 0.8% in March First decline in five years Chili’s (Brinker International Inc.) Lost $38.8 million in its latest quarter Buffets Holdings Inc. (Ryan’s Steakhouse) Closing 110 restaurants and cutting 4,300 jobs
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Struggling Segments Vicorp CEO Ken Keymer Cut portions of hash browns and french fries Examined leftovers of customers Projected annual savings: $500,000 Reduce number of sugar packets on tables Trying smaller slices of pie “It’s not a good situation at all for restaurants. It truly is the worst I have seen in my 30 years in it.”
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Failed Bets Private-equity investors loaded up the companies with debt they later couldn’t cover. “You tweak a menu, fix its distribution chain and then promote it right and you can make a dramatic impact on a chain’s finances.” Vince Lambiase, former Denny’s executive now managing director at the firm BBK Inc.
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Less Sauce Restaurants are changing their menus to accommodate new prices. Daily specials, less sauce on food, decreased quality of food. Families are eating out less due to better quality of prepared food offered at grocery stores. Restaurants are switching suppliers to cut costs. Outback, Ruby Tuesday, smaller franchises
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