Wednesday, June 29th, 2011
When it comes to restaurants, mom and pop’s aren’t the only ones who’ve faced a dismal few years as the economy has faltered. A number of large national chains are in serious jeopardy of bankruptcy and possible closure by the end of the year, according to TheStreet.com’s Bankruptcy Watch.
Though some chains continue to see massive growth (McDonald’s, Chipotle, Starbucks), others have seen continued faltering, with giants Sbarro and Marie Callender’s succumbing earlier this year.
To determine which restaurants are at highest risk, the restaurant chains were measured using the Altman Z-Score, which measures not only stock prices but other assets, liabilities and other aspects of a company’s financial health.
According to TheStreeet, companies with a Z-Score higher than 3 are considered safe with little danger of bankruptcy, while those with a score of 1.81 or lower are considered distressed and are more likely to go bankrupt. Anything in between is a grey area. (Read more)
What’s interesting is that nearly all of the companies listed (from safest to least safe) have seen significant growth since last August when stock prices were flatlining across the board. But it may be a case of too little too late for some. Four have restaurants in Sonoma County, all of which are in the top five most vulnerable to bankruptcy.
Here’s the breakdown.
14. Red Robin, 2.91 (trending up)
13. Sonic, 2.9 (trending up)
12. Ruby Tuesday, 2.57 (trending down)
11. Carrols Restaurant Group (Pollo Tropical, Taco Cabana), 2.34 (trending up)
10. Einstein Noah Restaurant Group, 2.3 (trending up)
9. O’Charley’s (its namesake as well as Ninety Nine Restaurant and Stoney River Legendary Steaks), 2.12 (trending up)
8. Ruth’s Hospitality Group (Ruth’s Chris Steak House, Mitchell’s Fish Market), 1.78 (trending up)
7. McCormick & Schmick’s, 1.68 (trending up)
6. Bravo Brio Restaurant Group (BRAVO! Cucina Italiana and BRIO Tuscan Grille) 1.56, trending up
5. Domino’s Pizza, 1.47 (trending up significantly)
4. DineEquity (IHOP, Applebee’s), .78, trending up, but losing ground
3. Morton’s Restaurant Group, .77, trending stable near 52 week high in May
2. Wendy’s/Arby’s .68 trending up
1. Denny’s -.39, trending stable