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Casual dining is an economic indicator

economy-changes-affect-your-sales-funnelHow’s an area’s economy doing?

Just check the traffic at casual dining restaurants such as Outback, Longhorn, Logan’s and Olive Garden.

J&R Restaurant Group’s sales at its eight Mississippi and Tennessee Outback Steakhouses dropped along with the economy from 2007-2009. By 2010, with a degree of life returning to the economy and job insecurity lifting, people began treating themselves to the quality-cut grilled steaks and bloomin’ onions the Australian-themed restaurants offer. J&R Group’s Outback sales rose along with the optimism.

» READ MORE: Outback Steakhouse dream realized in Flowood

By 2013, with the recovery in full stride, J&R’s Outbacks achieved 5 percent growth and have continued to grow through the first six months of this year, according to Steve Grantham Jr., president of the Jackson-based restaurant company.

The economy is as important as food preference for getting a customer to take a seat inside an Outback, he said. “The declining economy and unemployment and under-employment are factors in everyone’s disposable income amounts.”

Food quality and price can offer some offset to negative economic factors, he added.

While the Great Recession may have put large dents in sales totals for Mississippi’s casual dining establishments, it hardly thinned the herd. Numbers from the U.S. Bureau of Labor Statistics show that Mississippi’s casual dining restaurants, those typically defined as drinking and eating establishments, totaled 4,116 in 2007 and grew to 4,234 in 2008 and to 4,247 in 2009 – the worst years of the economic slump.

By 2010, they slid to 4,229 and grew to 4,304 and 4,367, respectively, the next two years, the BLS reported.

The restaurants operated more leanly in the early years of the recession, however, with employment dropping from 79,800 in 2008 to 77,700 by 2010. With the economic rebound of 2011, employment at casual dining establishments returned to close to pre-recession levels, growing to 79,400.

At the close of 2012, the restaurants employed a 12-year high of 82,300.

“Where we are seeing growth is in the franchised national brands (multiple segments) and very small independent market,” Mike Cashion, executive director of the Mississippi Hospitality and Restaurant Association, said in an email.

Casual-dining establishments still have a load of challenges, Cashion noted. “We know the job situation is tenuous and as such so is the discretionary spending in general, In general, sales have been basically flat to up fractionally. In many cases it is more about profitability.”

Meanwhile, food prices keep rising, along with insurance, he noted.

National brands, Outback among them, in both the casual and fast-causal categories have a marketing advantage over the independents, Cashion said. “Look at the menu offerings: two for $20 meals, buy-one-entrée-take- another-home are two examples of price points that indies have a hard time competing with.”

In Mississippi, restaurant development is based largely on demographics. Developers fish where the fish are biting, Cashion said.

That gives them a critical mass to market toward and “provides the impetus to get guests through the door,” he added.

One type of guest getting more difficult to get through the door is the Millennial, a young adult USA Today says sees casual dining establishments as “uncool,” a perception the national newspaper says grew out of years of being dragged into such restaurants by their Baby-Boomer parents.

“Most Millennials would rather starve than be caught in any of those places,” Bob Goldin, executive VP of restaurant research firm Technomic, said in the USA Today report.

They are more drawn to the fast-casual restaurants. The proof, USA Today says, is in the growth of Chipotle and Panera, which Technomic reported grew at about twice the rate of the 500 largest casual dining chains such as Applebee’s and TGI Friday’s.

Considering their need for speed, one key to drawing Millennials is to “get them in and out” in 40 minutes, said Grantham, the J&R Restaurant Group president and Outback franchisee.

Take over 40 minutes and “you’ve lost them,” he said, and noted they prefer to eat at the bar or the booths in the bar.

“The Baby-Boomers still make dining out an experience,” he said, while Millennials will treat it more like a “necessity.”

One upside is that if a restaurateur impresses a Millennial with the quality of food and service, the Millennial is likely to send out an “OMG, This is Great!” on Instagram or Facebook.

That’s how word-of-mouth advertising works in the digital age.


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About Ted Carter