May 5/New York/Marketwire -- A new study by the global business-advisory firm AlixPartners LLP shows that, given the current economy plus current conditions in the industry, up to 40% of America's restaurant chains could face severe liquidity crises within the next 12 months. The study shows that restaurants are now saddled with a debt-to-equity ratio more than double what it was in 2006, that cash levels have dropped at a rate of 6.5% per annum since 2004 and that only in the lower-price end of the market have earnings and returns on investment been anything but worrisome.
AlixPartners studied 110 restaurant chains across four main categories: fine dining, casual dining (eateries with lower prices but that still offer full table service), fast-casual dining (those with no table service but with the promise of a higher quality of food and atmosphere than a fast-food restaurant) and quick-service restaurants (where food is ordered at a walk-up cash register or at a drive-through window). It also surveyed 1,000 consumers about their recent dining habits and expectations for future spending. Almost half (48%) of respondents said they plan to eat out less frequently in the coming year, and over half (51%) predicted their average spend per meal would be $10 or less, up from 42% for 2008.