The restaurant industry breaks down into the following segments: QSR (McDonald's, Wendy's, Burger King, etc.), Fast Casual (Chipotle, Panera, etc.), Casual/Mid-Scale (Applebees, Olive Garden, Red Lobster), and then Fine Dining. There may be some additional breakdown on the upper tier, but I am in the QSR business and we tend to focus our interest on the first 3 segments (QSR, Fast Casual, and Casual/Mid-Scale).

For quite some time now the Mid-Scale segment has been in trouble. Comp sales are down and costs are up. Fast Casual is seeing some success while others are suffering as consumers are trading down. The financial situation in both the market and from a balance sheet perspective will I believe see more companies like Bennigans disappear from the restaurant landscape. Applebees is having problems getting financing. Market Caps on some chains are very low. And then there are the companies that were Leveraged Buyouts that could be in trouble (Outback, Bertucci's, Checkers) as a result of high debt.

In the QSR arena some players are gaining all traffic on "value." Subway is showing huge sales increases, but it is all coming from the $5 Foot Long. How long until the franchisees can't afford it and then what is the exit strategy? If the deal goes away most likely the customers do too. And then there is Triarc (Arby's) which bought a struggling Wendy's.

Some of these brands will probably disappear over the next few years. Only the strong will survive. Now is definitely not the time to go into the restaurant business.