The New York Times reports that Bennigan's -- an "Irish-themed bar and grill" -- closed its 200 U.S. sites, throwing hundreds out of work. When you combine gasoline prices over $4 a gallon, higher food prices, and declining incomes, people change their economic behavior. That is particularly true when people can no longer use the equity in their homes to cover the gap between what they want and what they can afford.

In April, I posted on the recession diet, which is the way that consumers are coping with the squeeze on their budgets. They have staycations, they don't drive to or shop at the mall, they eat at home, and they buy more pasta and consume fewer vegetables and steaks.

It's great news that gasoline prices have come down recently -- in some cases as much as 20 cents a gallon. But it's not clear whether that will be enough. In any case, the Times provides a nice list of those restaurants and retailers that have filed for bankruptcy in the wake of the recession diet:

• Bennigan's
• Steak & Ale
• Mervyn's, mid-tier department store chain
• Steve & Barry's, a fashion retailer
• Linens 'n Things
• Sharper Image

I think there will be more such bankruptcies and I plan to look at publicly traded companies in these industries to see which are the likeliest candidates. If you have ideas you'd like to analyze, please post your thoughts below.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Recession diet bankrupts restaurants, retailers originally appeared on BloggingStocks on Wed, 30 Jul 2008 11:47:00 EST. Please see our terms for use of feeds.

The New York Times reports that there's a price to pay for your staycation. As I posted, many people are skipping their summer vacations and staying at home thanks to the litany of economic problems we've become all too familiar with in the last year.

Here are some of the ways that people pay the price for not taking a vacation:

• Health risk. The Times reports that men who skipped vacations for five straight years had a 30% higher chance of suffering a heart attack than those who took an extended annual break from work each year. It notes that Brooks B. Gump, an associate professor of psychology at SUNY Oswego and a colleague, Karen A. Matthews believe that vacations help the brain build "reserve capacity" which helps it "cope with stressors that come up."
• Discouragement. The Times also quotes Hollister H. Hovey, a public relations executive who lives in Brooklyn, who postponed a trip to Scandinavia this summer because of high air fares and the weak dollar. She said: "It's a tremendous disappointment that you're sort of stuck here. It's too expensive to drive, too expensive to go overseas, because you can't afford to fly, and once you're there, you can't shop. I know that travel is a luxury. But it really plays on the heart and minds of people, because people need that escape."

Continue reading Paying the price for your Staycation

Paying the price for your Staycation originally appeared on BloggingStocks on Sun, 20 Jul 2008 11:44:00 EST. Please see our terms for use of feeds.

Continue reading High energy cost era suggests major changes ahead for the United States

High energy cost era suggests major changes ahead for the United States originally appeared on BloggingStocks on Tue, 03 Jun 2008 18:54:00 EST. Please see our terms for use of feeds.