'Survival of Fittest': Local Restaurants Hit by Economy
It's been more than a decade since Dave Whitney had to cook at one of his Mac's Breakfast Anytime restaurants.
But four days a week, customers will find him in front of the grill at his location on U.S. 1 in Southern Pines.
"Life has changed," says Whitney, who purchased the business 15 years ago and had grown it to 11 restaurants in seven counties before the recession hit.
Today, the economic downturn has forced Whitney to close or sell all but four of his restaurants.
"The past 18 months have been really bad for us," he says. "All of a sudden, business just bottomed out. We thought we would be somewhat insulated because we try to keep our prices reasonable.
"We still have a really good local following. But it's not enough when your sales drop by a third, which happened to us 12 months ago. People's eating and shopping habits have changed."
Mac's is not alone. In the past month, at least seven Moore County restaurants have closed their doors, including such local institutions as May Street Market and JFR Barn.
"Summer is terrible for business," says Con O'Mahoney, owner of The Bell Tree and O'Mahoney's Pub & Grill in Southern Pines. "June, July and August are always our slowest months. That's why a lot of these restaurants are closed."
Patrick Coughlin, president and CEO of the Moore County Chamber of Commerce, says the restaurant business is tough even in good times because the margins are so thin.
"The restaurant business is inherently challenging," Coughlin says. "There's been so much uncertainty since the recession ended. Despite the recent losses, there are some indications that good things are happening."
Whitney's rebound strategy has been to get rid of the non-Moore County locations, which he says were never profitable, and return to his roots.
"We've come back to our home base, and we're trying to rebuild," he says. "I'm bringing it back to where I started. I just hope there are no more new shining diners coming to town."
Therein lies the rub for Whitney and other restaurateurs in Moore County - they don't mind competing for local dollars among themselves but abhor seeing those dollars leave the county via chain-owned restaurants.
"People need to realize that all the mom-and-pops need their support to survive," he says. "I definitely don't have a problem with people who frequent other local restaurants. There are a lot of good locally owned restaurants in Moore County. Even if you don't support me, support somebody, just not corporate America."
O'Mahoney agrees that many Moore County residents are "forgetting to support their local businesses."
"I know for a fact that the food quality is less at a franchise than what you'll get at a local restaurant," O'Mahoney says. "Would you rather have something nuked in a microwave or made fresh on the grill? I'm not trying to be mean to the chains, but there's something special about eating at a unique, small restaurant where the local ties run deep.
"You may have to pay a little extra. You may have to wait a little longer for your food. But it takes time to cook good, quality food because everything is cooked to order."
Both Whitney and O'Mahoney acknowledge that times are tough for everyone, not just restaurateurs.
"If consumers are eating at home, we understand," Whitney says. "If they're eating elsewhere, we'd welcome them back. We just implore people to support their local businesses so it keeps the money in town. We need their help to survive these hard times."
Like Whitney, O'Mahoney is doing whatever it takes to keep the doors open.
"It's a tough market out there," he says. "Why do you think I cook and bartend sometimes? This is my livelihood. This is how I pay my bills. This is my heart and soul. I do everything I can."
Paul Stone, president and CEO of the N.C. Restaurant and Lodging Association, says the industry is a mixed bag in North Carolina at the moment.
"It's really survival of the fittest," Stone says. "The coast and military towns are strong. Raleigh is doing pretty well. And there are other pockets of success throughout the state. But more than anything, the jobs reports are not good. When the economy's down and people aren't working, they'll go out less and spend less money when they do."
Restaurants in North Carolina are a driving force in the state's economy and are projected to have total sales this year of $14.1 billion. They also employ an estimated 395,000 people, or about 10 percent of all workers in North Carolina.
Overall, the U.S. restaurant industry is on track for its best year since 2007, with sales expected to exceed $604 billion in 2011, up 3.6 percent over 2010.
"The restaurant industry overall is and always has been very competitive, and the economic downturn certainly has made for challenging business conditions over the last few years," Annika Stensson, director of media relations for the National Restaurant Association, wrote in an email.
However, driven by stronger same-store sales and traffic levels, and a more optimistic outlook among restaurant operators, the association's Restaurant Performance Index (RPI) rose above 100 in June, the last month for which statistics are available.
The RPI - a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry - stood at 100.6 in June, up 0.8 percent from May's level of 99.8. In addition, June represented the sixth time in the last seven months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.
"Restaurant operators are optimistic that their sales environment will improve in the months ahead, while their outlook for capital spending also remains strong," says Hudson Riehle, the association's senior vice president of the Research and Knowledge Group.
Whitney believes that consumers need to ask themselves one question when making their dining decision: "Is it somebody who cares about the community as much as you do?"
Contact Ted M. Natt Jr. at email@example.com.
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