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Table by table, restaurants gain ground

It took more than a year, but American diners are coming out of hiding, starting to splurge on everything from tea to tacos and tacking on some dessert.

The meals aren’t fancy — and business is far what it was before the recession sent the nation spiraling — but restaurateurs big and small say they’re breathing a tentative sigh of relief as tables fill up.

At Deleece, a restaurant on Chicago’s north side, crowds are bigger than they’ve been in months. It’s noisier, too.

“People are out and they’re spending a little more and maybe they’re buying that extra appetizer they didn’t before,” said Brandon Canfield, the restaurant’s chef.

In the depths of the recession, Deleece’s customers might order a glass of wine, a salad and an entree. Now, they’re more likely to get a bottle of wine, a hot appetizer and an entree. They’ll also split a dessert, which adds up to bigger bills and full tables.

The shift, which Jefferies restaurant analyst Jeff Farmer calls a “slow grind,” began in late January and is gaining steam.

“They’re not necessarily seeing the light at the end of the tunnel, but there’s a realization that things aren’t going to get any worse than they are right now,” Farmer said.

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On many weeknights last year, in the depths of the recession, Tursi’s Latin King restaurant in Des Moines closed one of its three dining rooms and pared its kitchen to a skeleton crew.

Now, all three rooms are open on most nights, and the kitchen is busy again.

“These last couple of months are a lot better than they were last year,” said Robert James Tursi, whose family owns the restaurant, an upscale establishment that specializes in steaks and Italian food. Food sales were about 10 percent higher in February and March than they were during the same months a year ago, he said.

Restaurants all over the country are beginning to see signs of a potential recovery after a dismal 2009. Sales at some restaurants have risen in the last few months, and the industry has hired thousands of additional workers.

“There’s no question about this,” said Harry Balzer, chief industry analyst at the NPD Group, a market research firm that tracks sales at 47 restaurant chains with a total of 103,000 outlets. “There’s a recovery going on.”

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Restaurants back on the menu

The restaurant sector has coped with the recession a lot better than many industry-watchers had thought it would. It seems eating out has become more deeply ingrained in the consumer psyche, and less of a discretionary item, than it was during previous downturns. At the same time, many of the UK’s biggest restaurant chains have used their scale to cut costs and their marketing nouse to attract customers. But does that mean that cylicality is off the menu for good? We doubt it.

Meal or no meal

One of the reasons for the resilience of big restaurant chains last year is that they were quick to enter into aggressive promotional activity. For most of 2009, the branded dining-out market was awash with meal deals, such as voucher code promotions, two-for-one deals and meals for a tenner, as restaurants battled it out with pub groups to get diners through the door. This has kept trading robust, although at some cost to profit margins.

“The reality of 2009 was better than feared for many in the leisure sector and particularly restaurant operators,” says Greg Feehely, head of research at broker Altium Securities. “The industry starts 2010 in a much better position than it started 2009, but it’s still pretty brutal in terms of getting people through the door.”

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The ongoing recession has taken a bite out of local restaurants’ profits, with more and more residents ‘dining in’ their homes. To retaliate, these establishments are adjusting their business plans to reclaim their customers.

Becky’s Restaurant and Lounge owner Rebecca Smith said her difficulty stems deeper than economic hardship.

The problem, she said, is that she had previously leased out the restaurant and has lost customers because of it.

“I don’t think it would be this bad if people know I’m back but a lot of people don’t know that I’m back yet,” she said.

To correct this, Smith has hired a promoter to inform old patrons of her return and possibly attract new customers.

According to Smith, this is just one attempt to increase Becky’s clientele.

Like many other local businesses, Becky’s has resorted to discounting its services in hopes that prospective patrons will be more inclined to spend at the establishment.

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In a sign of the lingering recession, actual sales data collected from nearly 3,000 restaurants and bars across the country show that business was sluggish for this year’s Super Bowl, with total sales on Super Bowl Sunday down nearly 6 percent vs. the 2009 Super Bowl Sunday.

“The Super Bowl is the first big event of the New Year, and we had hoped to see people returning to bars and restaurants,” said David Henkes, Vice President at Technomic and leader of the firm’s beverage alcohol practice. “This is the first true indicator for 2010 that restaurants and bars are still struggling, and it corresponds to our forecast for another down year for the foodservice industry.”

While overall revenues in restaurants and bars were down 5.5 percent, the drop was greater for food. Alcohol sales actually declined by 0.7 percent, indicating that more people cut back on food during the Super Bowl than cut back on alcohol.

Data is pulled from a database that is collected and maintained by GuestMetrics, based in Ashburn, Virginia. Technomic and GuestMetrics have a strategic partnership in the foodservice industry.

For further information on Technomic’s beverage alcohol forecast and programs for suppliers in the on-premise beverage alcohol channel, please contact David Henkes at 312-506-3927 or dhenkes@technomic.com.

Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. Its services include numerous publications and digital products, as well as proprietary studies and ongoing research on all aspects of the food industry.

The Recession Is Not Killing Restaurants

Three-course Valentine’s prix fixe dinner for 2: Bisque of Maine Lobster, Duck Confit Cassoulet, Muscat Poached Apricot Tart. The tab: $70 per person – or $100 if you want the optional wine pairings.

At these prices, it’s hard to believe there’s a recession on – but then, it’s even harder to woo a girl with a bucket of Popeye’s. Lots of actual and would-be couples will be dining out this Valentine’s weekend – splurging on champagne and basking in candlelight. For many, such indulgence is a rare treat. But what’s not rare is the dining out. The odds an adult will eat a meal at a restaurant at least once a week are 1 in 1.52 (66%) – the same as the odds a person 16 or older is in the labor force (1 in 1.52).

Okay, so on a week-to-week basis we are talking more Cracker Barrel than we are Le Cirque. And when it comes down to what Americans like to eat, it’s the Outback Bloomin’ Onion most of us are craving, not duck confit – the odds an adult prefers American food when dining out are 1 in 3.57. Even so, most of us can’t make do at home. According to the National Restaurant Association, 65% of us feel we’re unable to duplicate the taste and flavor of our favorite restaurant foods in our own kitchens.

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Recession’s bite easing off restaurants

Some Phoenix-area restaurants, bars and coffee shops are seeing an uptick in business after a tough 2009 took a toll on their bottom lines.

January bar and restaurant sales have received a boost in the Phoenix market from the Tostitos Fiesta Bowl, National Football League playoff games and some improvement in consumer confidence. The sector is hoping February’s start to spring training will further help sales.

“We have seen better foot traffic, especially the weekend of the 15th of January with the (P.F. Chang’s) Rock ’n’ Roll Marathon and NFL games. It was the best Sunday we have ever had in our 16 years of business,” said Jim Scussel, owner of Four Peaks Brewing Co., which operates bars in Tempe and Scottsdale. “Our general numbers are up in January over last year, so that means better foot traffic.”

Chad Barnett, who owns 30 Subway restaurants in Arizona, said foot traffic is equal to or better than it was at the same time last year.

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