Struggling national Mexican chain closes locations, gets new life
More than half of the popular Mexican chain's locations have already been closed.
In the restaurant business, situations can fall apart quickly. Since the business has such small margins in the first place, even a small downturn can turn a profit into a loss.
That can happen for a number of reasons. Consumers may simply eat out less because they're worried about the economy. They may also trade down and opt for a restaurant one (or more) levels cheaper.
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A steak person can become a burger person or a "something even cheaper" person when their budget does not easily cover their higher-end tastes. Some people, of course, are just being cautious, while others are facing up to realities of their personal financial situation.
Restaurants are also vulnerable to other aspects of the economy. If labor costs increase, which they generally have, then that puts stress on the bottom line. The same thing is true when it comes to ingredients and other costs.
