Many of America’s once-great restaurant chains are now impossible to find. While McDonald’s and Subway locations continue to multiply, Howard Johnson’s and Chi-Chi’s are all but forgotten.
24/7 Wall St. relied on food industry consulting and research firm Technomic to identify famous American chain restaurants that have either completely vanished, moved overseas or have only a few locations left. In their heyday, these restaurants had hundreds, if not thousands, of locations. As of 2012, most of these once successful brands had just 25 stores or fewer across the country.
Most of the chains that make the list are casual dining restaurants like Chi-Chi’s and Ground Round. According to Technomic’s Vice President Darren Tristano, their troubles were due to increased competition from larger, more successful operations such as Applebee’s, TGIF, Olive Garden and Red Lobster.
“Those brands did better in terms of expansion, and set the bar much higher," Tristano said. "It’s really a combination of greater unit expansion. Those that couldn’t keep up and didn’t have the franchises or the financing struggled.”
Many of these restaurants experienced sudden declines in the early 1980s. Sambo’s was once a national brand with more than 1,000 locations. However, a combination of financial problems and a troubling association with racist imagery used in advertisements forced Sambo’s into bankruptcy and resulted in the closure of more than 400 locations.
For other chains, the troubles began much later. In the case of Bennigan’s and Steak & Ale, a slowing economy during the recession led to lower earnings and an inability of their parent company to service debt. As a result, the chains were liquidated with little warning.
Bennigan’s parent company, Metromedia Restaurant Group, filed for Chapter 7 bankruptcy in 2008. All Steak & Ale locations were closed. The more than 200 Irish-themed locations dropped to just a few dozen. The company has emerged from bankruptcy under new ownership. While some are optimistic about the brand’s prospects, “recovery generally means you’ve hit bottom, but in their case, they’ve continued to close underperforming units,” Tristano warned.
To determine the famous restaurant chains that are now hard to find, 24/7 Wall St. identified brands that, according to Technomic, had hundreds of U.S. locations at their peak between the 1980s and 1990s and a national presence. As of 2012, these restaurant chains could have, at most, only a small number of locations.
These are famous restaurants chains that are hard to find.
1. Howard Johnson Restaurants
> Restaurants in 2012: 2
> Restaurants in 1980: 129
> Year founded: 1927
AP Photo/Matthew Cavanaugh
Howard Johnson’s was, for decades, one of the most well-recognized American businesses in the country. The franchise expanded from a single ice cream store located in Quincy, Mass., in 1927 to an empire of restaurants and hotels. By the 1970s, there were more than 1,000 Howard Johnson’s restaurants in the United States. Currently, there are only two restaurants in the entire country: one in Bangor, Me., and one in Lake Placid, N.Y. One of the factors contributing to the decline of the chain was the decline of the motel industry nationwide, according to Tristano. The chain has since shifted focus to its hotel division and now maintains properties across the world.
2. Mister Donut
> Restaurants in 2012: 0
> Restaurants in 1980: 835
> Year founded: 1955
Harry Winouker founded Mister Donut in 1955 after dismantling a failed business venture with his brother-in-law, Bill Rosenberg, the future founder of Dunkin' Donuts. By 1970, there were hundreds of franchised locations across the United States, and the brand was acquired by International Multifoods, at the time one of America's biggest food companies. In 1983, Japan’s Duskin Co. Ltd. bought the rights to Mister Donut for all of Asia. Since then, the brand has caught on in Japan, where it is the largest donut chain, with more than 1,100 stores. Worldwide, there are more than 10,000 Mister Donut stores. But as the brand expanded abroad, it vanished at home. Currently, there are no Mister Donut locations in the U.S., after most were acquired in 1990 by Dunkin' Donuts’ former parent company Allied-Lyons. “The growth of Starbucks and Dunkin' Brands, and their domination of the U.S. has certainly forced out Mister Donut, and other donut places,” said Tristano.
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3. Steak & Ale
> Restaurants in 2012: 0
> Restaurants in 1980: 196
> Year founded: 1966
Steak & Ale was once, alongside Bennigan’s, part of Pillsbury’s chain restaurant holdings. In 1980, there were just under 200 Steak & Ale locations in the United States. But by 2008, that number had dropped to 50. That is when S&A Restaurant Corp., which ran the chain as well as Bennigan’s, filed for bankruptcy. Although Bennigan’s has been revitalized and continues to operate, Steak & Ale no longer exists. Both chains were conceived by Norman E. Brinker, who also helped to popularize Chili’s and built Brinker International Inc. (EAT), one of the nation’s largest food companies.
> Restaurants in 2012: 0
> Restaurants in 1980: 81
> Year founded: 1975
Chi-Chi’s was founded in Minneapolis in 1975 as a family-style Mexican restaurant. By 1985, the company had nearly 200 locations around the country. But, according to Tristano, the success of other Mexican-themed chains like Taco Bell and Chipotle began to chip away at the company’s success. In 2011, Chi-Chi’s filed for bankruptcy. At the time of the filing, the chain had roughly $100 million in debt. Shortly after the filing, a hepatitis A outbreak at a location resulted in several deaths. All franchise restaurants have since closed. However, “Chi-Chi’s still has their brand licensed for salsa and tortilla chips. So the brand is still around, even though they have no restaurants,” Tristano added.
5. Ground Round
> Restaurants in 2012: 25
> Restaurants in 1980: 177
> Year founded: 1969
Ground Round was founded as a pub-style restaurant in 1969 with a small menu and casual environment. The chain was once part of the 1,000 Howard Johnson’s stores. Now, the brand is owned by its own franchisees, who acquired the assets of Ground Round in a bankruptcy sale in 2004. As of 2012, there were just 25 locations nationwide, mostly in northern states, with four in North Dakota and seven in Minnesota. According to the Farmington Independent, a new Ground Round location will open in Farmington, Minn., in September. The restaurants were located primarily in more rural locations and were forced out by other national chains like Buffalo Wild Wings and Applebees, according to Tristano.
> Restaurants in 2012: 1
> Restaurants in 1980: 1,118
> Year founded: 1957
Sambo’s was named after its two founders, Sam Battistone and Newell “Bo” Bohnett. At one point the chain included 1,118 restaurants. However, many customers, especially in the Northeast, felt uncomfortable with the name and the company’s history. In its early marketing efforts, Sambo's used the principal character from Helen Bannerman’s 1899 book “Little Black Sambo," which has been widely criticized for promoting negative racial stereotypes. Issues of political correctness were damaging to the brand as early as the 1970s, Tristano said. The chain suffered from financial troubles and filed for bankruptcy in late 1981 after failing to restructure its debt. The first Sambo’s in Santa Barbara, which is owned by the founder’s grandson, remains in business.
> Restaurants in 2012: 32
> Restaurants in 1980: 40
> Year founded: 1976
Irish-American-themed restaurant Bennigan’s was founded in 1976. It was owned for a time by the Pillsbury Corp., which also owned Burger King. After finding success in the 1990s, Bennigan's began facing heavy competition from other casual family chain restaurants such as Chili’s, Applebee’s and TGIF. In 2008, Bennigan’s filed for bankruptcy and closed more than 200 franchises. Currently, there are just 32 Bennigan’s locations in the United States. But the company has come out of bankruptcy under new ownership, and there may be hope for the future of the restaurant chain. Tristano noted, however, that the chain was still closing its weakest-performing restaurants.
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