Operations

Full-service chains continue to prune

Friendly’s, Red Robin plan more closings of underperforming units.
Photograph: Shutterstock

Friendly’s and Red Robin Gourmet Burgers and Brews are quietly closing more units, underscoring the struggle by venerable full-service operations to maintain traffic and sales. 

The Friendly’s family-dining chain has closed or is about to shutter seven units, all in New Hampshire and the brand’s home state of Massachusetts. 

All five Red Robins in the Canadian province of Alberta have been tagged to close by mid-December. 

Although closings are routine for restaurant chains, the volume has risen sharply in the last year or so, particularly within the full-service sector. Pizza Hut, for instance, intends to close at least 400 of its dine-in restaurants. Del Frisco’s Grille is firing down the ovens of at least four stores. O’Charley’s has reportedly shuttered 19 this year, Ruby Tuesday has shrunk by 26 locations and Steak ‘n Shake has pulled the plug on 106 sites, though it says those closings are temporary.

The Don Pablo’s Grille Mexicana and Farrell’s Ice Cream Parlour chains shut down altogether.

Conventional wisdom holds that casual dining is losing business to the fast-casual and quick-service markets, while family dining concepts such as Friendly’s are facing increased competition from quick-service establishments at breakfast. Overall industry traffic fell 3.5% among chain restaurants during the third quarter, according to the research firm Black Box Intelligence. 

Friendly’s closed 23 restaurants on one weekend in April. More than a dozen units had ceased operation earlier in 2019. 

The 85-year-old chain, one of the industry’s oldest, now consists of about 160 restaurants. At one time, it extended to more than 840 locations.

The brand did not respond to a request for details about the closings. But it issued a media statement"As shifting consumer demographics and market dynamics present challenges across the industry, it is incumbent on us to regularly evaluate our restaurant footprint with a focus on long-term viability and strategic resource investment as we work to reinvigorate the beloved Friendly's brand.”

It describes the units tagged for closure as “underperforming locations that can no longer be sustained by the local market."  

Red Robin officials told local media that employees of its branches in Alberta will continue to be paid until Dec. 15. The casual-dining chain closed 10 mall locations earlier this year as part of a review of its real estate portfolio. That effort also includes selling company-operated restaurants to franchisees on a selective basis. 

The company posted a 1.5% decline in same-store sales on a 6.4% drop in traffic for the second quarter. It recently hired a new CEO, turnaround specialist Paul Murphy, and reconstituted its board of directors in hopes of reversing a sales slide that began with operational changes intended to cut labor costs.  It is facing a takeover attempt by one of its largest shareholders, the activist Vintage Capital. 

Red Robin did not respond to a request for comment about the Alberta closings.

The Friendly’s units that have closed or are about to cease operations are located in Stoneham, Falmouth, Saugus and Lee, Mass.; and Concord, Manchester and Laconia, N.H. 

 

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