Rising food costs could force US eatery overhaul

Posted on 08 March 2011

By Caroline Humer

NEW YORK, March 7 (Reuters) – Record-high food prices could be the tipping point this year for U.S. restaurants already struggling with high debt loads and tight-fisted consumers…

Food prices have soared as consumers in emerging economies have grown richer and erratic climate conditions have hurt supplies. Wheat prices have surged 60 percent this year, and restaurants have also been hit by increases in beef, cheese, cooking oil and produce costs…

Whether these companies are able to restructure debt outside of bankruptcy depends on their aims.

In bankruptcy court, a company can break leases on underperforming locations. That helps restaurants that have expanded too much, said Lisa Donahue, co-head of the turnaround and restructuring services at advisory firm AlixPartners.

Other operational efficiencies or menu changes can easily be done out of court, Donahue said.

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Click here to see how DinerMagic can help you keep up with rising food prices by letting you change your menu prices yourself anytime, anywhere.

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