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Restaurants Feel the Pinch

The restaurant industry has fallen, and it can't get up. To add insult: The worst may be yet to come.

Same-store sales are sliding. Commodity prices are climbing. Units are closing. Customers are dwindling. Some of the top names in all ends of dining are in pain, from Starbucks to Applebee's to The Cheesecake Factory.

"Whether or not the rest of the economy is in a recession, the restaurant industry certainly is," says Ron Paul, president of restaurant researcher Technomic.

The financial squeeze is hitting hardest at dinner. Dinner traffic fell 2% last year, says research giant NPD Group. Lunch is slowing, too, says Dave Jenkins, president of NPD's U.S. foodservice business.

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