Dennis Lombardi, an expert on restaurant turnarounds and consultant with WD Partners in Ohio, says the recession hit chains like Olive Garden hard–or rather, it hit their customers. Baby Boomers in particular, he notes, are still reeling, having seen their retirement savings reduced or erased. They’re reluctant to spend, and when they do spend are sensitive to value.
The consumer confidence index remains low at 64 as of Dec. 27. “It needs to be at 90 or above,” he says, “for the restaurant business to do well.”
Overall the U.S. added 100,000 restaurants in the decade before the recession hit in 2008. Analysts reckon about 20,000 need to close to bring supply and demand back into balance.