Restaurant analysts blame aggressive expansion plans, consumer cutbacks for bankruptcies

[flashl]

By LAUREN SHEPHERD | AP Business Writer
3:09 PM CDT, July 30, 2008

NEW YORK (AP) _ Restaurant companies may have depended too much on easy-to-borrow money to back aggressive expansion plans, industry experts say — a move that may lead to more bankrupt chains and fewer new eateries opening in the months to come.

The gloomy outlook comes in the wake of the filing for bankruptcy protection on Tuesday by S & A Restaurant Corp., the parent company of Bennigan's and Steak & Ale restaurants. S & A is owned by Metromedia Restaurant Group, a part of billionaire John Kluge's empire. Franchised locations will remain open and are not included in the filing.

...

At least four other chains have filed for bankruptcy protection since the start of the year. That compares to about two during all of 2007 and six in 2004, estimated Ron Paul, president of consumer research company Technomic Inc.

Paul said the number of restaurant bankruptcies this year "could easily surpass" the 2004 number.

[Warpy]

1. Most of these chains were expanding slowly enough to survive

even a wimpy economy. What's killing them is that people know they're staring down the pit of a depression if we don't manage to insert a few firecrackers up Congressional butts and get some common sense financial regulation back.