State

Eateries seeing return of diners after tough year

It took more than a year, but American diners are coming out of hiding, starting to splurge on everything from tea to tacos and tacking on some dessert.

The meals aren't fancy — and business is far what it was before the recession sent the nation spiraling — but restaurateurs big and small say they're breathing a tentative sigh of relief as tables fill up.

"The last couple of years have been kind of tough, I'm not going to lie to you," said Mike Nelson, owner of Mike's Roadhouse, a bar and grill across the street from Modesto's Vintage Faire Mall. "But we've seen a steady growth in the past six months."

Nelson said more customers are ordering appetizers, desserts and add-ons, such as avocado with their burger or blue cheese on their steak.

"Customers are spending more," he said. "I think there is more faith in the economy. People are feeling a little bit better about what's going on."

Roman Wagner, owner of P. Wexford's Pub and Bleachers Grill in Modesto, said he's also noticed an uptick in the past couple of months.

"More families are coming out dining," he said. "Maybe the parents were doing

date night and leaving the kids at home. It's getting busier earlier and staying busy later."

The shift, which Jefferies restaurant analyst Jeff Farmer calls a "slow grind," began in late January and is gaining steam.

"They're not necessarily seeing the light at the end of the tunnel, but there's a realization that things aren't going to get any worse than they are right now," Farmer said.

Still, it wasn't until March that the change became downright impressive, sending revenue in restaurant locations open at least a year up at scores of fast food and casual dining chains. The numbers had stagnated for nearly two years, experts said.

A packed house on Wedneday?

Modesto residents Jesus Rojas and Yvonne Maldonado said they haven't changed their dining habits because of the recession. They go out to eat about twice a week and spend about $30 for lunch and $40 to $45 for dinner with drinks.

But both said they have noticed in the past couple of months that the restaurants they frequent are busier, especially for dinner.

"When we go to happy hour (in Turlock), it's full and we can't get a table," Maldonado said. "And this is on Wednesday."

Few restaurant chains release sales by month, but data from market research firm NPD Group showed that business increased for five of the past eight weeks at nearly four dozen fast food and family-style restaurant chains.

At McDonald's Corp. sales climbed 5 percent in March, and at Brinker International Inc.'s Maggiano's Little Italy they were up 5.2 percent.

There was a double-digit increase at Panera, which along with strong sales in January and February prompted the company to boost its profit forecast.

A number of factors could be behind the March upswing: An influx in cash from tax refunds, warm weather that drew people from their homes, or increasing confidence that the economic recovery isn't a mirage.

The change is visible even in the areas of the nation hit hardest by the housing crisis that fueled the recession.

At BJ's Restaurants Inc. — which has a restaurant at Modesto's Vintage Faire Mall — sales during the quarter rose 8 percent in Arizona and climbed "in the low double digits" in Florida.

The Cheesecake Factory Inc. said the important performance measure shot up in every area of the country during the first quarter — "even in California, which was a softer market for us through the recession," Chairman and CEO David Overton told investors this week.

The number of diners at Cheesecake's restaurants nationwide rose 1.7 percent. And they ordered more desserts. The chain's signature indulgences accounted for 15.2 percent of revenue, up from 14.7 percent the previous quarter.

Starbucks also managed to snag an increase in tea and coffee customers — its first in 13 quarters.

Early forecasts seem to show the first quarter's momentum is trickling into April.

Business has not returned to pre-recession levels at Mike's Roadhouse in Modesto, Nelson said, but it definitely has improved. He said that during the worst part of the downturn, business was down 35 percent. Now it's down 15 percent from its pre-recession peak.

Stephen Backus, co-owner of Red Brick Cafe and On Broadway With Two Guys in downtown Turlock, said he hasn't spotted any trends yet, though his banquet business is holding its own this year after dropping last year.

"It's been really spotty," he said. "One month is really good, one month not so good."

A further rebound might hinge on the recovery putting a dent in the nation's 9.7 percent unemployment rate; the unemployment rate in the San Joaquin Valley is about double the nationwide rate.

"I don't believe that the spending levels are going to get back to pre-recession levels until people have some confidence that they're going to have a place to go to work and can put food on the table at home or away from home," McDonald's CEO Jim Skinner told investors Wednesday.

  Comments