Chattanooga restaurants weather economic storm

Chattanooga restaurants weather economic storm

December 24th, 2010 by Brittany Cofer in Business Around the Region

Bartender Beau Arnold rushes between the kitchen and the dining area at Taco Mamacita during dinner service. The restaurant is one of several to experience growth through the down economy.

After about three years of battling the effects of an ailing economy, the restaurant business appears to be picking up steam, according to industry experts.

Years of high unemployment and low levels of disposable income caused many families to turn to their own kitchens instead of those of restaurants.

Chattanooga, however, wasn't hit as hard as other parts of the country, local restaurant owners said, making the turnaround slightly less noticeable here.

"It's not that people really quit eating out, they simply dropped down in their budget range a little bit," said Lawton Haygood, who owns and operates Sugar's Ribs, Canyon Grill and The Boathouse. "I don't know if that's true throughout the country, but in Chattanooga that's what has happened."

Haygood said price has been a driving factor in the effects restaurants have felt from the economic downturn, with lower-priced eateries typically faring better than those in the upscale category.

Mike Curtis, vice president of marketing for CraftWorks Restaurants and Breweries, parent of Big River Grille and Gordon Biersch restaurants, said even though those restaurants are considered to be in the "upscale casual" segment, they have "actually fared better than the industry average throughout the latest downturn."

Increases in sales and customers in that category began in the summer and have stretched through the fall, he said. The biggest effect the economy has had on CraftWorks' restaurants is the "dramatic pull back in business-related travel," since the company's restaurants are attractive to business travelers and conventiongoers, Curtis said.

FAST FACTS

• Tennessee restaurants are projected to register $8.7 billion in sales this year.

• Restaurants in Georgia are projected to reach $14.4 billion in sales for 2010.

• Jobs in the restaurant industry are expected to grow by 9.1 percent by 2020.

• Every dollar spent in Tennessee's restaurants generates an additional $1.25 for the state economy; a dollar spent in a Georgia restaurant generates an additional $1.31 in sales for the state economy.

Source: National Restaurant Association

"Industry trends and research show healthy recovery in this area, with increased hotel occupancy and private event bookings," he said.

Since September, the restaurant industry as a whole has begun reporting increased same-store sales and customer traffic levels, according to the National Restaurant Association, with momentum expected to continue into 2011. The association has attributed the rebound to modest increases in employment and income throughout the country.

Taylor Monen, co-owner of Taco Mamacita, said business at her restaurant has grown steadily since it opened two years ago, with a 40 percent sales increase from 2009 to 2010. She said the economic situation hasn't affected Taco Mamacita as much as she and her husband anticipated, but now they're starting to get a glimpse at what the future may hold.

"I almost think we are possibly starting to feel the effect of people feeling more comfortable with their spending and eating out more," she said. "The sales we've had have really created this environment for us where we're able to grow."

Also growing in the Chattanooga market is the Mojo Burrito brand, with the recent opening of a location in East Brainerd. Owner Eve Williams said the quick-service format of her business has helped shield her from some of the economic troubles other restaurants have felt.

"With only counter tipping involved, if someone wishes to do so, you're saving money from not having table service," she said. "And because we did well during the recession, we were at that point able to acquire funds through a stimulus program to create more jobs and open another restaurant."

Still, she is actively trying to attract customers with extra incentives, such as a new text program that delivers special coupons directly to the customer's cell phone.

Though many of the local restaurants haven't experienced severe losses because of the downturn, they said they are looking forward to more profitable years ahead.

"Barring any major catastrophe, I look forward to a prosperous 2011," Williams said.

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