Food for Thought: Restaurants Recover from the Great Recession Skip to main content
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Food for Thought: Restaurants Recover from the Great Recession

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Could the food industry be the latest bellwether of a better economy and returning consumer confidence? Some industry experts seem to think so.

According to William Neuman’s report in his recent New York Times article, “The Tables Turn,” “Restaurants all over the country are beginning to see signs of a potential recovery after a dismal 2009. Sales at some restaurants have risen in the last few months, and the industry has hired thousands of additional workers.  “There’s no question about this,” said Harry Balzer, chief industry analyst at the NPD Group, a market research firm that tracks sales at 47 restaurant chains with a total of 103,000 outlets. ‘There’s a recovery going on.’ Mr. Balzer said that March sales at restaurants open for at least a year were up 1 percent compared with March of last year. While that might not seem like much, it broke a string of 10 months of negative sales. He cautioned that while the sales trends were uneven across the industry, almost half the chains he tracks — mostly fast-food and family dining restaurants like Denny’s — had begun showing gains. Still, many restaurant owners and executives said they expected the rebound to be slow and halting.  ‘Right now, we’re starting to see a few more people come in,’ said Larry Reinstein, chief executive of Fresh City, a chain that sells sandwiches, salads, burritos and stir fry dishes at 18 outlets in the Northeast. But he quickly added, ‘The typical consumer is still cautious of what they’re spending.’

Because restaurants remain consumer-driven pursuits, industry executives are looking at the nation’s staggering overall employment as another indicator of how much this contraction really means. Obviously, if people remain unemployed, they’ll be eating out less…and that means the restaurant industry will remain cautious, if not cautiously optimistic.

Fortunately, this optimism extends to hiring practices, as restaurant owners bring on more employees now than at any time during the recession.  As Neuman reported, “In the first three months of 2010, the restaurant and food service industry added 42,500 jobs, adjusted for typical seasonal hiring patterns, according to the Bureau of Labor Statistics.” Even with this hiring trend, the restaurant industry appears to be merely “re-loading,” still with overall 251,000 fewer jobs now than it did in December 2007, around the time our “Great Recession” started.

Neuman found that among fast-food restaurant chains, local favorite Sonic took some meteoric hits during the extended economic downturn. “The drive-in burger chain, known for its roller-skating car hops, said sales at its approximately 3,500 stores declined 13 percent from December through February, compared with the same period a year ago. The chain said the drop was partly caused by harsh winter weather, but the ailing economy also played a major role. Buddy McClain, who owns 71 Sonic stores in the South, said that while sales were not growing, they had finally stopped falling in March at his Mississippi and Alabama outlets.”

“Everybody’s working harder and making less money, which is not what we call the American way,’ Mr. McClain told Neuman, who has owned Sonic franchises for 32 years. “We’ve been through four so-called recessions since I’ve been in Sonic, and nothing has been near to this.”

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