A mixture of sun and clouds: low sales, unemployment curb operator's enthusiasm, but signals suggest better times are not too far away

Nation's Restaurant News, May 18, 1992 by Jack Hayes

Low sales, unemployment curb operator's enthusiasm, but signals suggest better times are not too far away

While operators across the Southeast believe that signs of a turnaround are modestly evident, they are still hesitant to declare the recession over - as long as unemployment lingers and retail sales remain intermittently sluggish.

But for the most part, restaurateurs made it through April ahead of last year and with the opinion that cover counts will continue improving for the rest of 1992 - barring an unforeseen catastrophe.

"We're seeing wonderful increases in some markets, but certain cities are still struggling," says Chip Roehl, executive vice president of 27-units Shells Restaurants, a Tampa-based budget seafood dinner-house chain.

While an upswing in domestic tourism is reigniting traffic in the Orlando market, Shells stores in Tampa are benefiting from stronger European tourism, Roehl explains. Atlanta is also rebounding, he adds.

"But Charlotte is still a little rough," Roehl says. "And in Broward and Dade Counties [south Florida's Fort Lauderdale and Miami markets], fixed income retirees are reacting to the lower interest rates by not eating out."

William Hall, president of Town & Country Restaurant near downtown Chattanooga, Tenn., is expecting a major new tourist attraction called the Tennessee Aquarium to bring in a significant wave of tourist business.

"Locally, there's a better attitude," says Hall, who nevertheless saw one of his city's older fine-dining destinations, The River Landing, shut its doors since the beginning of the year. "The outlook is getting more optimistic. Fortunately, food costs have held, but we're pressed harder than ever by FICA and insurance."

Similarly in Columbia, S. C., where first-quarter numbers shot ahead of 1991, operators were forced to make adjustment for the Persian Gulf war, which had paralyzed business during those same three months a year ago.

"We moved ahead of 1991 by 1,500 people, or about 6 percent, between January and March. But as afar as 1990 is concerned, we're still behind," says Duncan MacRae, a partner in Yesterday's, a casual restaurant-bar in Columbia's Five Points neighborhood.

Labelling 1990 "an unbelievable year" until October, two months after President Bush sent more than 400,000 troops into Saudi Arabia, MacRae says 1991 was like a nightmare.

"By November and December I was running around trying to figure out what it was I was doing wrong," MacRae says. "I didn't get as afar as jumping off a bridge, but I was up there walking around for a while."

Concerned primarily with head counts, MacRae claims to be feeling good by what he now sees. But his management staff first had to be reduced, and he is spending more time himself in the kitchen until the numbers show more dramatic improvement.

Applebee's, TGI Friday's Harper's, Spaghetti Warehouse and Longhorn Steaks have all invaded the Columbia market recently, and MacRae is expecting to see Chili's move in any day.

"I think the big thing we all have to deal with is people not drinking as much as they used to," MacRae observes. "Other than that, I'm encouraged, because the trend is there - covers are up and so are the dollars."

Meanwhile, the prospect of any last-minute economic improvement because of the coming election is not expected either by independents or by chains in the region. Operators doubt there are further steps the Bush administration could take even if it wanted to trigger a vote-winning upswing at this late date.

"The economy still has a long way to go," says David Dubrof, president of Lettuce Souprise You Inc., a seven-unit buffet concept with stores in Atlanta and Houston.

"People eating out are watching their dimes - spending very carefully," Dubrof adds. "But how can you blame them? There's a problem with confidence in the country's leadership."

"They've done all the loosening in the world, but it's not putting people back to work or encouraging investment or more eating out. It's only driving the stock market," agrees Richard M. Gordon, senior vice president of the Atlanta-based The Great American Cookie Co., a 350-unit chain with 100 stores in the Southeast.

"It's just possible some restaurants will be selling more broccoli after election day," Gordon jokes, indicating that Southern markets are more healthy now than during the last half 0f 1991.

While January and February became a "slam dunk" as afar as year-to-year sales were concerned - thanks to easy comparisons with 1991 - March and April percentages were not so dramatic, Gordon explains. Nevertheless, he is expecting the up trend to continue regardless of how modest it is.

"The increases are accelerating in many cities, so it's an easy time to be optimistic," says Gordon, adding that his best Sunbelt markets now are Atlanta, Texas and the central and Gulf Coast cities of Florida. Smaller cities in the region, such as Valdosta, Ga., plus several towns in central and eastern North Carolina, are also showing better numbers, Gordon notes.