Restaurants: The Ups ... the Downs

Many Midsize Restaurant Chains Fight to Stay Afloat as Food Costs Soar, Young Customers Get Pickier

Excerpt:

Younger people once were among the most reliable customers for less-expensive chain restaurants. These days, though, many of them have less in their pockets, forcing them to eat at home more and to be pickier when they do grab a bite elsewhere.

"When I get home from work, the first thing I do is make lunch for the next day," says John Karwacki, a 22-year-old who works at an investment bank in Chicago.

That shift in habits is just one of many problems leaving some smaller and midsize restaurant chains, such as Friendly's, Chevys and Quiznos, grasping for enough profit.

On top of the weak economic conditions that have challenged restaurants for the past several years, commodity costs have spiked.

Comment:

Down:

• Friendly Ice Cream Corp. filed for Chapter 11 bankruptcy protection in October
  
• Real Mex Restaurants Inc., the owner of Chevys and other sit-down Mexican-food chains, also filed for bankruptcy protection in October
  
• Quiznos ... in trouble
  

Up:

• Chipotle Mexican Grill
  
• Subway
  
• Yum! Brands
  
• McDonalds
  

McDonalds is the only restaurant stock I own. It's not an exciting restaurant but it is solid performer