July 24, 2014

Industry Outlook 2006 - Retail: Restaurants

Full Plate

The industry is projecting growth for 2006, but the storms of the past two years have given restaurateurs indigestion.

Amy Keller | 1/1/2006

HURRICANE HIT: Bahama Breeze owner Darden Restaurants estimates it lost up to $1.5 million from hurricanes last summer.
The four hurricanes that swept through the state in 2005 put a strain on many eating establishments in hard-hit regions. Ruth's Chris Steak House, which relocated its headquarters from New Orleans to Orlando in the wake of Katrina's destruction, had to temporarily close its four south Florida locations due to power outages caused by Hurricane Wilma. Orlando-based Darden Restaurants, which owns Olive Garden, Red Lobster, Bahama Breeze and Smokey Bones, estimated losses of between $1 million and $1.5 million. Wilma caused Tampa-based Outback Steakhouse -- which also operates Carrabba's Italian Grill, Bonefish Grill and Lee Roy Selmon's, among others -- to lose 144 operating days and about $1.2 million in revenue in just the first three days after the hurricane made landfall.

Many independent restaurants that were heavily damaged by hurricanes were forced to close permanently.

The inclement weather put a damper on an industry that's otherwise booming. Restaurants statewide registered about $19.9 billion in sales in 2005, a 5.6% increase over 2004, and rapid population growth and brisk tourism will translate into stellar profits and job growth over the next 12 months and beyond, according to the Florida Restaurant Association. The FRA projects that employment will increase 17.9% over the next 10 years, from approximately 736,000 jobs in 2005 to 868,000 by 2015.

HURRICANE FACTOR: With forecasters predicting an increase in hurricanes for the next several years, restaurateurs are getting ready. "We got battle-hardened last year," says Jim DeSimone, vice president of corporate affairs for Darden Restaurants, which operates 146 restaurants in Florida. If a Category 1 or higher storm is headed toward Florida, Darden boards up its stores, pulls perishable food from its freezers and trucks it out of the area. The company also has a network of vendors on standby with portable generators it can move around the state after the hurricane passes. "We have a system where when hurricanes hit, we're down. When it passes, we get them open very quickly," DeSimone says. The company has also beefed up its assistance to employees, instituting cash payrolls during disasters and a "Darden Dimes" program, which provides $100 to $1,000 grants for housing and transportation.

FUEL FACTOR: Will high fuel costs cut restaurant-goers appetites? Perhaps. Nearly one-third of consumers surveyed by ACNielsen last summer said they would eat out less often because of higher gas prices. But most major restaurants report they have not noticed any measurable impact on sales because of higher fuel costs.


Restaurant Jobs

Restaurant and food-service employment represents 9.7% of the total employment in Florida.

  • California - 1,348,200 (restaurant jobs)
  • Texas - 879,500
  • Florida - 736,000
  • New York - 638,200
  • Ohio - 543,000

Source: National Restaurant Association, based on Bureau of Labor Statistics data

For more information: restaurant.org/research/


Wage Rise

A minimum-wage increase this month could put a crimp in smaller restaurants' operating budgets. The 25-cent increase will raise the minimum wage to $6.40 an hour, while tipped employees will see their hourly pay rise to $3.38.

Tags: Dining & Travel, Around Florida

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