Don't Wait

Gift cards - the new convenient gift to give.
Or is it?

Gift cards have become extremely popular gifts, especially at Christmas.

How many do you have stashed waiting for the right time to use them?

Have you heard the term "use it or lose it?" Well, as gift cards go, the time is now. Use them as fast as you can.

Why, you ask? Well have you read my past posts about businesses either teetering on the edge or falling off the cliff?



Bankruptcies Swipe Gift Cards' Value

The number of retail bankruptcies or liquidations this year is expected to reach the highest levels since the 1991 recession.

Brian Riley, senior analyst at The TowerGroup, estimates that shoppers could lose more than $75 million just from stores and restaurant closings in 2008.

TowerGroup's figure doesn't include mom-and-pop services like the local nail salon. Riley said such small operations, which are most vulnerable to economic downturns, pose the biggest risks to gift card holders.

Restaurants Struggle
Amid Sluggish Economy

Few chains have been hit as hard as Ruby Tuesday , whose same-store sales at company-owned stores fell 10.8 percent in the fourth quarter. Cheesecake Factory fell 0.4 percent, which Chili's fourth-quarter sales fell 2.4 percent.

Same-store sales at Applebee's dropped 2.9 percent in the fourth quarter. The casual dining chain, owned by parent company IHOP, hopes that a new menu can help invigorate sales.

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.

More serious troubles may be ahead for the $558 billion industry. Except at McDonald's - which posted a mostly terrific 2007 - same-store sales at the nation's largest restaurant chains grew a paltry 0.3% last year, Technomics says. Same-store sales are those at stores open at least a year.

Worse, 49% of restaurants surveyed by the National Restaurant Association reported same-store sales fell in January, and 54% said customer traffic fell in January, the fifth month in a row.
"In the lifespan of casual dining, we haven't seen economic times like this," says Marc Buehler, CEO of Lone Star Steakhouse, which just closed 27 of 179 stores.

Evidence of tough times:

Restaurants are closing. After the Lone Star closings, 1,500 employees lost their jobs. "We're gonna get through this," says Buehler. "But it won't be easy."

Starbucks plans to close 100 low-performing units and will unveil a strategy of key changes at its annual meeting on March 19.

Pick Up Stix, a fast-casual Chinese chain, closed 26 of its nearly 100 locations in January.

Same-store sales are falling. Few chains have been hit as hard as Ruby Tuesday, whose same-store sales at company-owned stores fell 10.8% in the fourth quarter. "Unlike paying the mortgage, going out to eat is discretionary and can be changed easily," laments Richard Johnson, senior vice president.

Same-store sales at Applebee's dropped 2.9% in the fourth quarter. "Despite a challenging environment, we believe we can reverse this trend," says Julia Stewart, CEO of parent IHop. She says a new menu is in the works.

Steak 'n Shake's same-store sales dived 9.5% in the fourth quarter at company units. Chili's fell 2.4%. And Wendy's sales at company-owned stores fell 0.8%.

Cheesecake Factory fell 0.4%, and Howard Gordon, senior vice president, says that since going public in 1992, "We've never seen a time like this."

As a favor to my readers who are unable to run out and use those cards, rather than letting you lose out, you can forward all your gift cards to me and I will use them up fast.

Remember, you snooze you lose!!