Of course you could.

But if they led you blindfolded into another restaurant, could you tell immediately whether you were in a Bennigan’s, Ruby Tuesday (RT), Chili’s, Friday’s, Applebee’s… or some other? Before you read a menu or looked at the staff uniforms?

Probably not. Unless they led you into a restaurant in your own neighborhood that you visited often.

Bennigan’s is in bankruptcy, Friendly’s was a turnaround that got bought out, Steak ‘n Shake (SNS) is going down, Ruby Tuesday is cutting back.

And even as “sales” are rising for some restaurants, better double-check the numbers. According to industry watcher Technomic, the top 20 restaurant chains increased their locations by 45% in the past five years, while sales only rose 31%. So a good many of those improving sales numbers came from chains that expanded weaker and weaker businesses… right to the brink of failure.

As for the restaurants, what’s to choose? The menus and prices change periodically. And each has a different exact décor—but somehow they all look alike, smell alike and sound alike.

They are tired ideas. Each perfectly fits its stronghold—the suburban strip mall or parking lot facing a busy highway circa 1980. They are all the same as they were then. We needed a few of these chains. But there were too many. They wore this idea out. And now when people are cutting down on unnecessary spending, there is nothing festive, special or necessary about eating in these me-too restaurants. That—not just the economy—is what is dragging the casual dining group down and killing some of them.

This model so overwhelmed America 30 years ago that it is hard to imagine how one would decorate and set up a new restaurant chain that would be noticeably different and successful.

But someone will. Just as the 1950’s steak houses gave way to the 1980s casual American-Irish-comfort-everything concept, another model will come along.

Until then, I am watching stories like the bankruptcy of Bennigan’s and Steak and Ale (along with the turnaround for Talbot’s) and turnaround promises from others with great skepticism.

Forbes once listed the three traits for a good turnaround as a (1) sales jump, (2) cost-cutting, and (3) a new product.

Talbot’s (TLB) had a new product and it was a total mistake. Failing restaurants try changing menus and prices all the time without success. It has to be a new salable product. Something customers want to buy. And one that the business can sell at a profit in great numbers.

Cost cutting by itself is a losing plan. Companies do not get rich by selling off working assets. Period. They may even dilute their ability to carry on their business after stripping assets out. A good cost cutting plan has to pare off true fat and be carried out according to a strategy that leads somewhere. A case of this was when Office Depot (ODP) discovered it did not reap many extra sales on its excessive variety and limited some package sizes or colors while keeping the best selling version of items always in stock. It also closed stores that were within a prescribed distance of another office supply store. That is what a cost-cutting strategy should look like.

As for a sales jump? Well, by that time the turnaround has turned.

Source: Speaking of Turnarounds – Why I Don’t Like Restaurant Stories Now

Yesterday (Tuesday), two chains under the Metromedia Restaurant Group umbrella closed their doors after filing for Chapter 7 bankruptcy protection. More than 300 Irish pub-themed Bennigan’s Grill & Tavern locations, as well as nationwide Steak & Ale outlets were told not to open on Tuesday, as the chains no longer had enough money to pay staff through the rest of the week.

The casual dining restaurant closings are “something we’re going to see more of over the next 6 to 12 months,” Amy Greene, a director at Avondale Partners who tracks the restaurant industry, told The New York Times.

And while the casual dining restaurants are struggling, there’s slim hope of receiving financing to help make it through the current economic downturn.

“Banks have become less willing to lend to restaurants and franchisees,” Greene said. “The business fundamentals just do not support it right now.”

It might seem odd that casual dining restaurants are having so much trouble when data from the National Restaurant Association is pointing to a 4.4% increase in restaurant sales this year. But many analysts feel those figures are misleading, as the number of new chains and locations are outstripping consumer demand.

“The absolute sales are up for the restaurant industry; that’s because new units are opening,” Lynne Collier, restaurant analyst for Keybanc Capital Markets, told CNNMoney. “But when you look at same-store-sales, that has been negative for the industry for quite a while now.”

Same-store sales were flat in 2006, down 1.1% in 2007, and down 1.1% year-to-date, Collier said, although there was a slight bump in May, mainly attributed to the government issued stimulus checks.

The pattern of declining same-store sales for casual dining restaurants is why the closing of Bennigan’s shouldn’t have come as much of a surprise for anyone familiar with the industry, according to Ron Paul, president of Technomic, a restaurant industry-consulting group.

“These restaurants share many subtle and complex challenges that extend beyond this difficult economic climate,” Paul told MarketWatch. “To some extent, they’ve become victims of their own success – a mature category with too many units and not enough differentiation, at least in the eyes of consumers.”

With so many similar choices in the casual dining restaurant market, consumers have little incentive to choose Bennigan’s over similar competitors such as Carlson Restaurants Worldwide, Inc.’s T.G.I. Friday’s chain or Ruby Tuesday, Inc. (RT), whose shares are down almost 30% so far this year.

“All these bar and grill concepts are very, very similar,” Bob Goldin, executive vice president of Technomic, told The New York Times. “They have the same kind of menu, décor, appeal,” making it more difficult to establish brand loyalty among customers.

But some casual dining chains have found the recipe for success. Darden Restaurants Inc. (DRI), owner of Red Lobster and The Olive Garden, has been able to position itself as good value for the price.

“[Olive Garden] appears to be gaining share through a strong value message,” Bryan Elliott, restaurant analyst for Raymond James, told CNNMoney. He praised the company for its effective advertising and marketing. “All-you-can-eat bread sticks and salad creates a perception of lots of value for the money.”

And that’s why Darden shares are up over 18% year-to-date, while some of its casual dining rivals are being forced to close their doors.

Source: Casual Dining Restaurants Suffer from Slackening Consumer Spending