The National Restaurant Association undertook a program to polish the industry’s image—particularly among potential hires and politicians—by reminding the nation of restaurants’ huge contribution to the general economy and the American way of life. The theme of the program: Restaurants are the cornerstones of their communities.
On Sept. 11, 2001, the nation was convulsed by the murder of 3,000 Americans by Al Qaeda-backed terrorists. Dozens of restaurant employees stationed in the World Trade Center were among the victims, including the whole staff of the celebrated Windows on the World restaurant.
Within a day of the attacks, the industry mobilized to do its part. Among the heroes in uniform were famous chefs in whites, cooking in battlefield style near the rubble of New York’s twin towers to feed the army of first responders.
The industry’s Cornerstone program was tweaked to counter a nationwide dropoff in travel and business activity in the aftermath.
After 9/11, restaurants were tasked via the Cornerstone program to step up efforts to get people dining out again.
Another dire blow would be dealt to restaurants: the financial crises that tripped the economy into a free fall in 2008 and ’09. Consumers lost their homes, banks were seized by regulators and companies slashed their payrolls and investment spending, triggering the worst downturn since the Great Depression.
The industry struggled to recover, and bankruptcies were widespread for years afterward. The one bright spot: High unemployment made hiring easier.
A new type of restaurant caught the attention of operators, investors and consumers alike. The success of concepts such as Five Guys, Panera Bread, Starbucks and Chipotle turned the emerging fast-casual market into the industry’s hottest sector. The segment promised food as good as what consumers would find in casual dining, at a price closer to what quick-service restaurants charged.
The business lost by casual and quick-service chains prompted the players in those segments to copy the brash new fast-casual upstarts.
And the lines between markets were further blurred by escalating competition from convenience stores and supermarkets, rivals that had previously been dismissed as substandard in quality.
Investors in action
The decade brought a huge influx of money from private-equity (PE) firms, which had only dabbled in the industry beforehand. Suddenly, they were scarfing up restaurant companies like hungry teens hitting a buffet. The investors were treated initially like pirates in better outfits—raiders intent on buying distressed chains, improving their financial health and then selling the brands for a head-turning profit. But that reputation improved as the influx of capital helped to fix older concepts and fuel the growth of young ones. In time, even giant brands with sterling reputations, from Outback to Domino’s Pizza and Dunkin’ Donuts, were eagerly selling themselves to PE firms.