Restaurant industry bouncing back, but not everywhere

The restaurant industry that employs an estimated one in 10 workers in the U.S. is enjoying a robust rebound nationally, but the outlook in the Miami Valley is more mixed in part because of the harsh winter’s hangover.

“I think we were hit harder than other areas of the country by both the bad weather and the poor economy,” said Shanon Morgan, executive director of the Miami Valley Restaurant Association. “I think it’s going to take a little longer for us to come back.”

The National Restaurant Association reported last week that its Restaurant Performance Index — a monthly barometer that tracks the health of and outlook for the U.S. restaurant industry — has reached its highest level in two years. Sales and customer traffic levels are stronger, and restaurant owners and operators are more optimistic, the Washington-based association said.

The restaurant association found additional good news in the national jobs numbers released last week.

“Restaurants continued to be among the leaders in job growth, with the industry adding a net 32,800 jobs in June and more than 173,000 jobs during the first six months of the year,” an association economist said in a news release.

Overall, restaurant employment is up 3.1 percent this year through June 2014, nearly double the 1.7 percent gain in overall U.S. employment, the association said.

About two-thirds of restaurant operators reported a same-store sales gain between May 2013 and May 2014, up from 51 percent in April and the highest proportion since March 2012. Only 19 percent of operators reported a same-store sales decline in May.

“In addition, restaurant operators are increasingly optimistic about continued sales gains in the months ahead,” said Hudson Riehle, a senior vice president of the restaurant association.

Improving in Ohio

Glimmers of that industry rebound have emerged in west-central and southwest Ohio.

“On average, we are seeing sales increases, although we’re not back to 2008 levels,” Morgan said of her local association’s member restaurants.

And several new restaurants are opening or on the way. The region’s casual restaurant sector — especially sub-or-sandwich shops and pizza places — has attracted regional chains such as Firehouse Subs, McAlister’s Deli and Jet’s Pizza, which have opened or are planning multiple locations in the area.

Meanwhile, new independently owned restaurants such as Basil’s on Market in Troy and Sea Jax Tavern in Kettering have opened in recent weeks, and other independent restaurants are in the works in Dayton’s Oregon District, in Clayton and in Bellbrook, among other locations. And just last week, the nation’s largest restaurant chain (Darden, which includes Olive Garden and Red Lobster) opened a 6,280-square-foot, 240-seat LongHorn Steakhouse — the steakhouse chain’s third in the area — on Miller Lane in Vandalia, generating 80 to 100 new jobs.

Jordan Frink, the managing partner of the new LongHorn Steakhouse, worked his way up from a dishwasher position during his nine years with the restaurant chain, and spent more than two years as a manager at the LongHorn on West Dorothy Lane in Moraine before moving to the new restaurant. He sees no shortage of enthusiasm for dining out among the Miami Valley’s residents.

“The Dayton area has a lot of great places to eat,” Frink said. “The competition is great, but I think the pie is big enough for everybody.”

Well, maybe not everybody: The Tumbleweed steakhouse chain abruptly closed all three of its area locations — in Springfield, Kettering and Englewood — earlier this year. And in May, the Patriot Steakhouse in West Carrollton shut down after only seven months.

“I can tell you that I’ve been in the industry now for over 30 years, and I’ve never seen it be more difficult to be in business,” said Greg Carter, co-owner of the West Carrollton Patriot Steakhouse that closed. Carter also owns the original Patriot Steakhouse in Lebanon that remains open and “is doing well” despite a challenging climate, he said.

Prior to opening the independent Lebanon restaurant in January 2011, Carter worked for the LongHorn Steakhouse and Shells Seafood restaurant chains. He said restaurant owners, especially independent operators, are being squeezed by high food costs, even as their diners are struggling with high fuel costs.

High costs

The prices of meats and seafood — especially certain cuts of beef and pork — have reached all-time highs in recent months, forcing restaurant owners to choose between dwindling profits on every meal they serve, or risking customer backlash by raising menu prices.

Morgan said high food cost “is the number one topic of conversation” among her members. Those high costs hit independent restaurant owners harder than chains, she said. Large restaurant chains have economies of scale and in some cases can lock in prices of some foods months in advance.

Many independent restaurants, Morgan said, “are stuck between rising costs and customers who might not be willing to pay a higher price for their meals.”

The restaurant industry has always been volatile, with plenty of turnover. The same National Restaurant Association report that painted a rosy picture of the overall market revealed some caution amid the optimism. Restaurant operators’ view of the economy “remains somewhat clouded,” according to an association news release, with 28 percent of restaurant operators responding that they expect economic conditions to improve in the next six months, 15 percent expecting the economy to worsen, and 57 percent expecting economic conditions in six months to be about the same as they are now.

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