Why casual-dining restaurants should close thousands of units

Casual-dining restaurants have seen declining sales and traffic for a decade now, and as a result, there are fewer of them. The segment’s share of the supply of restaurants in the U.S. has shrunk since 2007, according to BMO Capital Markets analyst Andrew Strelzik. Yet there are still too many locations. Strelzik estimates the market is oversupplied by as many as 4,500 units, based on demand trends since the recession.

Key Takeaways:

• Casual-dining restaurants have seen declining sales and traffic for a decade now, and as a result, there are fewer of them.
• Closing restaurants, however, is easier said than done. The segment’s oversupply is likely to persist — shifting sales from one chain to another as concepts work to lure from a declining share of the nation’s restaurant business.
• Executives are trying to grow sales and add locations, not reduce them. All of them believe they have plans that could reverse sales slides. Many of these strategies succeed, at least in the short term, so there’s little incentive to shrink.

“Casual-dining restaurants have seen declining sales and traffic for a decade now, and as a result, there are fewer of them.”

http://nrn.com/blog/why-casual-dining-restaurants-should-close-thousands-units