Companies Headed for the Boneyard?

With household names like Circuit City and Linens ‘n Things already gone, chances are they will be joined this year by up to 15 other major names, including Chrysler and Dollar Rent-A-Car . Even Donald Trump’s casino & resort group is on the skids. Among the food companies facing the headsman’s ax are:

• Rite Aid (about 100,000 employees; 1-year stock-price decline: 92%). The debt load from acquiring Eckerd in 2007 makes it the most-leveraged drugstore chain in the U.S. With Wal-Mart selling prescription drugs, the prospects aren’t good.

• Sbarro (Privately owned; about 5,500 employees). Many of this chain’s 1,100 storefronts are in malls, where traffic is way down, and mall hours prevent Sbarro from adding a breakfast or late-night menus. Competitors Domino’s and Pizza Hut have less debt and stronger cash flow.

• Krispy Kreme (about 4,000 employees; stock down 50%). The chain over-expanded during the donut heyday of the 1990s, taking on a lot of debt, and requires high volumes to meet expenses and interest payments. Despite slashing costs and closing stores, the company has not earned an operating profit in 3 years.

• Landry’s Restaurants (about 17,000 employees; stock down 66%). This restaurant chain, which operates Chart House, Rainforest Café, and other eateries, needs $400 million in new financing to finalize a buyout deal dating to last June. At least two banks have already balked, leading to downgrades of the company's debt and the prospect of a cash-flow crunch. Landry's has managed to sell $295.5 million in senior secured notes in February 5, but this may only be a reprieve for their death sentence.

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