News on Friday that Mrs Fields Famous Brands, purveyor of cookies and frozen yogurt to mallrats across America, is filing for Chapter 11. This follows on the heels of London’s Fuzzy’s Grub, saviour of the hungover City worker and Sunday roast extraordinaire, which is reportedly reviewing its strategic options.
Some pundits have argued that in difficult economic times, life’s smaller luxuries – the peanut butter cookie, the pork loin ciabatta, will continue to sell. Starbucks of course, argued that £4 lattes had become a consumer staple – not just a boomtime “treat.” CEOs of PepsiCo and Cadbury have both said they expect to do relatively well out of a recession – selling comfort food to the masses to munch as they cry ponder over their mortgages and energy bills.
So are Fuzzy’s and Fields isolated incidents? There’s speculation Fuzzy’s may have over-expanded, having set up eight shops over the past six years. Mrs Fields was struggling against higher commodity prices, about $260mn of debt ($196mn of it publicly-traded according to Reuters) against $140mn of assets and likely fewer shoppers in general at American malls.
Still, other bastions of American ‘comfort’ – S&A Restaurant Corp. (owner of the Bennigan’s and Steak & Ale chains) and Old Country Buffet are also filing for liquidation or bankruptcy protection. Mala tempora currunt – if investors aren’t benefiting, at least waistlines might.
Related links:
Porn, coffee, health: no such thing as a recession proof industry – FT Alphaville
Analysts blame easy credit for restaurant woes – Associated Press