Olive Garden, Sbarro, Burger King Adjust To Survive Slumping Sales


Phew! Back from a week off, and a handful of food news notables for today. Industry ups and downs continue to hit everyone from the big names to the little names, with some of the larger notables filing for bankruptcy, restructuring, and revamping recently. First, pizza company Sbarro announced their bankruptcy filing early last week. With over 1000 locations in 40 countries, chain representatives expressed their hopes to cut debt by $175M in the move.

“We believe this plan represents the best opportunity for Sbarro to clear a path for future growth by restructuring its debt in an effective and timely manner,” Nicholas McGrane, interim president and CEO of Sbarro, said in a statement.

According to the Miami Herald, fast burger chain Burger King is also facing an uphill battle reporting a $34.5M loss for the second half of 2010. With over 12,000 units worldwide, the struggling company was sold last fall to investment group 3G Capital, with Chief Executive John Chidsey stepping down later this month as a result of the sale.

“This is a brand that needs to find its voice in the market, and right now it’s having trouble doing that,” said Mark Kalinowski, restaurant industry analyst with Janney Capital Markets. “If you’re going to compete in the same space as McDonald’s you need to figure out what your proposition is to the consumer that makes you different and better than McDonald’s. That’s where Burger King has struggled.”

Darden Restaurants Inc. also announced plans to renovate their Olive Garden brand, remodeling 400 of their 730 locations over the next few years in order to grow “brand perception and same-restaurant sales”. The location updates follow closely on the heels of a revamp of sister brands, Red Lobster and LongHorn Steakhouse.

Here in the Portland area, it was notable that a rather sizable buyout offer was delivered to a local chain. Tilman Fertitta, representing a subsidiary of management corporation Landry’s Restaurants, Inc., made a bid for Northwest seafood chain McCormick & Schmick’s. After posting a $25.1M loss in the fourth quarter of 2010, the restaurant company had planned “a multiyear remodeling program, management changes, training improvements, and an upgraded back-of-the-house system.” Fertitta, however, is convinced the required overhaul is much larger for the chain to revitalize its brand.

“We’d have to get rid of all the bad stores, which there are quite a few of,” he said. “And then we open up one at the right location when you can find it.”

Next week on Daily Blender, my quick Q&A with restaurateur Danny Meyer, who talked with me a bit at the recent South Beach Wine & Food Festival about his restaurant history and the latest Shake Shack expansion into Washington D.C.

~Jennifer Heigl