Bankruptcy filing closes some Bennigan's, Steak & Ales

Bennigan's and Steak & Ale closed about 300 stores suddenly yesterday after their parent company filed for bankruptcy.

The closings are the latest evidence that rising prices and budget-conscious consumers faced with a smorgasbord of food choices are squeezing profits at restaurants.

In the Philadelphia area, three Bennigan's and one Steak & Ale were shuttered. Bennigan's locations in Montgomeryville and West Chester, which are owned by franchisees, will remain open. Operations owned by franchisees were not part of the bankruptcy filing.

The restaurants owned by privately held Metromedia Restaurant Group, of Plano, Texas, filed for Chapter 7 bankruptcy protection yesterday in the Eastern District of Texas, less than two months after Metromedia said it was not preparing to do so. In a Chapter 7 filing, a company seeks to liquidate its assets and shut down.

Employees at local Bennigan's that closed said the parent company had told them not to talk to the press.

An employee at the Willow Grove Bennigan's, who would not give his name, said workers learned of the closing yesterday.

"We were given no warning, no heads up," the employee said.

Chris Gimaro, who owns the Montgomeryville Bennigan's, said that he was sad for those who lost their jobs, but added:

"I think it's going to boost our sales because we're [one of the few] Bennigan's in the Delaware Valley."

Paul Maychak, who operates the Bennigan's franchise in West Chester, which also will continue operating, said regular customers had steadied his business, which is still down a bit this year.

Neither Bennigan's nor the Metromedia Restaurant Group returned calls from the Associated Press for comment.

In the struggling restaurant industry, the hardest hit have been casual-dining chains and bar-and-grill restaurants, which charge higher prices than fast-food and other quick-service chains.

Earlier this year, the parent companies of the Bakers Square, Village Inn and Old Country Buffet filed for Chapter 11 bankruptcy protection. Other chains, including Outback Steakhouse and Ruby Tuesday, also are floundering.

"You get a restaurant business margin of 5 to 10 percent and you take away 10 percent of sales, and food costs go up by 3 percent, and suddenly they're losing money," said Ron Gorodesky, a consultant who runs Restaurant Advisory Services, of Blue Bell.

University of Pennsylvania marketing professor Stephen J. Hoch said Bennigan's gave consumers little reason to choose it over competitors.

"There are a lot of places exactly like Bennigan's," he said.

Stephen Starr, who owns 16 restaurants in Philadelphia, New York and Atlantic City, said his empire had seen a small increase over last year.

He closed the underperforming Center City high-end seafood house Striped Bass, which he is retooling into a posh steakhouse called Butcher & Singer. High prices don't scare people away, he said. Business at his steakhouse Barclay Prime, where the per-person tab is about $90, is strong, he said. Morimoto, his pricey Japanese restaurant near Washington Square, is "pretty much flat" over last year.