Five Chains That Suffered Spectacular Declines
At its peak in 2008, Quiznos had 4,636 locations in the US. Today it is down to an estimated 1,200 domestic units, a decline of 74 percent. While the Denver-based sub chain has a flourishing international business, with 600 units and counting, we could find no other concept that lost so many domestic locations in such a short time.
This brings to mind some of the industry's big collapses. Over the years, a number of restaurant chains have reached nationwide levels only to collapse, for one reason or another. Remarkably, most of these chains live on, and are even growing, serving as reminders of exactly how difficult it is to kill a restaurant chain. Here are some of them:
Roy Rogers. The Marriott Corporation founded Roy Rogers in 1968. At its peak, the roast beef chain had 648 locations, mostly in the Mid-Atlantic states. And then in 1990 Hardee's bought the chain, and started converting locations. When that plan didn't work, and Hardee's began struggling, the company sold the Roy Rogers units to its rivals. By 1996 the chain was down to 12, franchisee-owned locations. But those operators have kept plugging along, and the chain has grown in recent years—there are about 50 units in the Mid-Atlantic now.
Rax Roast Beef. At its peak in the 1980s, this Arby's rival had 504 restaurants. But then the company shifted much of its focus to its salad bar and lost customers. Stores closed. Rivals bought some restaurants and converted them, but the chain has survived. It has 13 locations, all but four of which are in Ohio.
Burger Chef. This is the only chain on this list that is no longer around. Burger Chef had more than 1,000 units at its peak in the early 1970s and was the second biggest fast food chain in the country behind McDonald's. But it was owned by General Foods, a food manufacturing company, and began to struggle. The owner closed units. In 1982 the chain was sold to Hardee's, which converted most of the remaining locations. Some franchisees held on, however, but the last one closed in 1996.
Sambo's. Sam Battistone (Sam) and Newell Bohnett (Bo) started a family restaurant, called Sambo's, in Santa Barbara, California, in 1957. Sambo's grew rapidly, using an innovative owner-operator model known as "Fraction of the Action" in which store managers invested in the stores themselves. By 1979 the company had 1,117 locations, but it also had lawsuits—some filed by those managers after Sambo's canceled that program. And then there was the name, which drew protests from African Americans and others who considered the name racist. It didn't help that the chain used the characters from the old children's book "Little Black Sambo" in its marketing to take advantage of the name coincidence. In 1981 the company filed for bankruptcy protection, and the next year all but one location shut down: the originally location, in Santa Barbara, which remains open today.
Bennigan's. We'd be wrong if we didn't include this chain in a piece, simply because its decline was so recent. In 2008, the company's owner filed for Chapter 7 bankruptcy protection and shut the doors to its more than 130 corporate-owned locations. But 170 franchisee units remained—after one of the company's lenders took over the franchise business just before the filing—yet over the subsequent months the company either terminated many of those units or they shut down on their own. The company declined to 34 US locations, a tenth of its domestic total from before the bankruptcy. But Bennigan's has a healthy international business, and is now growing units domestically through franchising—proving that even a chain once left for dead can come back. Even in this market.