Tag Archives: restaurant industry

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Restaurants serve super-sized economic impact

Think about the celebration that occurred after Arizona was awarded  the 2015 Super Bowl.

Much of that excitement came because of the economic impact the Super Bowl will have on the state. But the restaurant industry in Arizona generates revenue equivalent to hosting two Super Bowls a month.

“Restaurants are critical to Arizona’s visitor industry – and vice versa,” said Debbie Johnson, president and CEO of the Arizona Lodging & Tourism Association. “Arizona attracts more than 37 million visitors annually and dining is the No. 1 activity for those visitors. So the success of the two industries are definitely intertwined.”

Arizona’s restaurant industry, which included 8,885 eating and drinking places of business in 2011, is expected to rake in $10.5 billion in sales this year, according to the National Restaurant Association. Arizona’s restaurants also employ 262,200 people, roughly 10 percent of the state’s workforce. That number is projected to grow 15.9 percent by 2023 to 303,800 – translating into 41,600 new jobs in the industry.

“While the Recession claimed 500 Arizona restaurants, the industry that was born out of the recession was stronger and more resilient,” said Steve Chucri, president and CEO of the Arizona Restaurant Association. “From 2007 on, Arizona’s industry sales have grown from $7.9 billion to $10.1 billion (in 2012) with extremely modest growth in the hungrier years of 2008-2010.”

Chucri said Arizona’s rate of restaurant sales growth, while once the top in the nation at 6.2 percent, is starting to fight its way back, growing at a little more than 3 percent each year, boosting this industry’s sales by an estimated $400 million annually.

“I think the restaurant community has stabilized and I sense an increasing confidence in the community,” said Steven Micheletti, CEO of Z’Tejas Southwestern Grill, which has five locations in Arizona and plans to add two more in the next year. “New restaurants are being built and being opened in interesting parts of the city. There is ongoing collaboration between great entrepreneurs happening, creating some great restaurant experiences. Operators are building restaurants in all types of buildings, creating really fun dining environments.”
A lot of the growth in Arizona’s restaurant industry is coming from entrepreneurs and chefs who are giving consumers different and unique dining experiences.
“Some of the strengths in Arizona’s restaurant industry include population growth, strong tourism, unmatched lifestyle and weather, and access to good produce,” said Russell Owens, president and COO of Fox Restaurant Concepts. “With all of these factors working together, there is more appeal for great chefs to come to Arizona to offer innovative new restaurants and fresh ideas. I think we are seeing more creativity today than over the last 20 years and this will positively shape the industry in Arizona for years to come.”

That influx of great chefs and innovative ideas has become an economic engine for the tourism industry.

“Scottsdale has seen a growth in chef-driven, independent restaurants, which are fueling our culinary scene,” said Rachel Pearson, vice president of community and government affairs for the Scottsdale Convention & Visitors Bureau. “Not only do our resorts boast award-winning chefs and restaurants, but now you can drive to every corner of Scottsdale and find unique culinary experiences from well-known chefs.”

Not only are many of the new restaurants that are popping up utilizing fresh ideas and concepts, they are also beginning to increasingly rely on local produce and products to help serve their customers.

“Arizona visitors are really looking for a unique and distinct dining experience that they can’t get back home,” Johnson said. “So trends that we’re seeing in both hotel/resort restaurants as well as off-site restaurants include utilizing local ingredients and offering menu items and experiences that provide a taste of the local community.”

Micheletti has seen an increasing shift to supporting local farmers and growers, but the “Local First” trend doesn’t stop there.
“There’s also a growing influence of local crafted beers and wines,” he said. “Guests really are reading menus and asking questions about ingredients and sourcing. It’s not just about calories anymore.”

In addition to Arizona-grown ingredients, Chucri said one of the most transcendent trends he sees in the industry is the desire for healthy foods.

“The tendency towards more healthful items for the entire family illustrates that consumers are looking to restaurants for more than an indulgent special occasion meal,” he said. “Restaurants are becoming a part of consumers’ daily lives, an extension of their family. Whether it be a compliment dish for Easter dinner, a post-Little League party, or a got-home-too-late-to-cook family dinner, restaurants have infused themselves into the fabric of families everyday lives … a trend that is certain to stick around.”

Restaurant Industry

Restaurant Industry Starts To Simmer

The American restaurant industry is starting to simmer. Consumers are spending more on meals, and foot traffic at establishments is improving, albeit from a diminished base, according to the 22nd edition of the Chain Restaurant Industry Review, released at this week’s Restaurant Leadership Conference by GE Capital, Franchise Finance. As sales trends recover, operators are translating those positive feelings into a greater willingness to invest in their businesses. And with increasingly accessible credit, they’re able to commit to higher capital expenditures.

“The restaurant industry has come through the upheaval of the past several years by listening closely to the consumer and adapting to their changing tastes – and they’ve done it well,” said Agustin Carcoba, president and CEO of GE Capital, Franchise Finance. “Depending on their segment, brand and focus, operators have emphasized food quality, service quality, menu options and other factors that will lead to renewed growth this year and in the years ahead. Even better, operators did it all while managing operational costs.”

Consumers spent $406.6 billion at restaurants in 2011. For 21 consecutive months, they spent more at restaurants than grocery stores, and that trend is expected to continue. Last year, quick-service restaurants (QSR) accounted for 48.0 percent of that figure, while full-service restaurants (FSR) counted for 48.1 percent. The QSR category includes limited service, fast casual, take-out locations and snack and non-alcoholic beverage bars, while FSR includes family, casual, high-end casual and fine dining establishments.

Operators’ improved expectations can be partially attributed to positive results that were sustained throughout last year. QSR same-store sales grew 3.2% last year – ahead of the FSR rate of 2.4%. QSR benefitted from eight consecutive periods of growth due to more consistent traffic, while FSR relied more on menu price increases and higher average checks.

“Restaurateurs are no longer in survival mode; now they’re planning for the future,” said Trey Brown, commercial leader of GE Capital, Franchise Finance. “To capture that growth and maintain a competitive advantage, they’re investing in their businesses by building new stores, remodeling existing ones or investing in new equipment.”

The level of liquidity available in the restaurant industry space continues to improve. Merger and acquisition activity – an indicator of the popularity of the restaurant industry among investors – increased last year. Total syndicated volume in the restaurant space increased more than 26% to almost $12 billion in 2011. Strategic buyers returned, such as American Blue Ribbon Holdings LLC, Darden Restaurants and Landry’s Inc. Private equity firms were also active; for example, Golden Gate Capital acquired California Pizza Kitchen.

“We expect restaurants to continue to be appealing acquisition targets because of the ongoing increases in food dollars spent away from home, as well as the scalability of this business model,” Brown added.