November 6-7, 2009, Vienna, GA, 229-268-8275, www.bigpigjig.com.

November 2, 2009 at Buckhead Beef, www.acfatlantachefs.org.

November/December, 2009

By Debby Cannon, Ph.D., CHE, Director of the School of Hospitality in the Robinson College of Business at Georgia State University

As 2009 comes to a close, the majority of restaurant operators and owners will most probably mutter, “good riddance” to the old year in hopes of a much better 2010. While it would not be accurate to state that every operation struggled this past year, 2009 was a financially challenging year for the hospitality and tourism industry, including the largest of its sectors, restaurants and foodservice.

Dr. Dave Pavesic, professor in the Cecil B. Day School of Hospitality in the Robinson College of Business at Georgia State University, described 2009 as one of “unprecedented financial stress.” Dr. Pavesic, a former restaurateur who specializes in restaurant and foodservice management in the School of Hospitality, noted that customer traffic and spending were down in all segments, except quick service restaurants (QSR).

As cited in Nation’s Restaurant News on September 14, 2009, in an analysis of 68 restaurant companies – in the categories of QSR, casual dining, fast casual, coffee and snack, and family dining and buffet – only six were showing positive growth in the most recent accounting period. Of those six, three showed growth from 0% to 0.9%.

The largest percentage declines, according to Dr. Pavesic, were in fine dining and higher-end casual restaurants. The higher the menu price point, the greater the decline. Capital Grille, a Darden Restaurant brand, was down 22% in the analysis of the most recent accounting period, while the other Darden concepts of Olive Garden and Red Lobster were down only 0.6%. Other high-end chains have reflected similar declines. Ruth’s Chris corporately is down 23.4%, McCormick and Schmicks is down 17.3% and Morton’s is down 26.1%.

The announcement in late summer 2009 that the Ritz-Carlton, Buckhead’s Dining Room was closing on October 1 was stinging evidence of the brutal impact of the economy on the top tier of fine dining. Citing the economy and changing dining habits, the 25+ year restaurant that put Atlanta on the map for culinary talent and extraordinary service will not, at least for the foreseeable future, be transitioned into another dining concept.

News was better for many restaurant companies in segments other than casual dining and fine dining. In the QSR segment, McDonald’s, Popeyes and Yum Brands were showing 3-4% growth globally as of the third quarter of 2009. Domestic sales growth was roughly half the global growth percentage. In the coffee and snack category, Krispy Kreme showed the highest increase at 5.9%.

In the pizza segment, Domino’s showed an increase of 4.1% with Papa John’s in second place with only a 0.1% increase. Dr. Pavesic noted that pizza chains continue to use discounting heavily and incentives like free desserts with certain orders.

In the family dining segment, Steak and Shake posted a 5% increase. This was followed by Frisch’s Big Boy and Frisch’s franchises of Golden Corral units at 4.6% and 2.3%, respectively. In the fast dining segment, Chipotle Mexican Grill posted increases of 1.7% and Panera Bread showed no change.

On a positive note for the consumer, restaurants have probably never been more creative in offering promotions and specials. According to Dr. Pavesic, the sandwich segment has been particularly competitive. “The $5 foot-long deal initiated by Subway has been picked up by just about every sandwich operation, whether chain or independent. On any given Sunday, you will find at least a half-dozen restaurants with full-color flyers promoting discounted menu items. In addition to this, the bulk direct mailers to them home are also full of discount coupons. No one wants to pay full price.”

According to Dr. Pavesic, the heavy discounting that has characterized the restaurant industry may be looked back on as a dangerous precedent. “It communicates that menus have been ‘over-priced’ and that customers were paying more than they should have been paying in the first place.”

One of the biggest challenges during the economic downturn has been that as sales have fallen, fixed expenses have remained the same. Dr. Pavesic notes that some restaurants have been able to renegotiate leases and even loan payments with landlords and lenders, but many have not been so lucky. Subsequently, rent, as a percentage of total sales, amounts to greater than 7-8% of sales, and every percentage point increase comes directly off the net-income percentage. For smaller operators and independents, the resulting cash flow problems can be a huge issue for business survival.

What is the projection for restaurant entrepreneurs thinking of entering the industry within the next year? Since banks are not loaning to many small businesses, those with savings or working capital are the only small operators who will probably be opening restaurants within six months or more. Dr. Pavesic recommends a very focused approach for potential entrepreneurs in the near future. “If you are going to open a restaurant in these times, you will need to have price points in the $9.99 to $12.99 price range. Anything higher is highly risky. Diners, sandwich shops, coffee shops, meat and two-vegetable places are the kind of restaurants with these price points.”

Survey data from the National Restaurant Association (NRA) also reflect the industry’s challenges in 2009. The NRA’s Restaurant Performance Index quantitatively reflects the business environment of this past year. This monthly composite index measures optimism and pessimism that restaurant operators have about the retail restaurant industry each month. A score of 100 is neutral. Over 100 indicates current or future expansion and a score under 100 reflects current or future retraction. While the Restaurant Performance Index was below 100 for the 23rd consecutive month as of July 2009, the results for the month of July were better than June, as well as being higher than four of the preceding six months.

As we look ahead to 2010, there are several promising changes. Most economists agree that the bottom may have been reached in regard to the economy. While predictions favor a slow recovery that may not show improvement until mid-to-late 2010, there is optimism, although perhaps guarded, about the new year.

Another positive point is important federal legislation that could help the restaurant industry nationwide. Representative Neal Abercrombie (D-Hawaii) introduced legislation this past year to increase the federal tax deduction for business meals from 50% to 80%. This increase would boost business meal sales by $6 billion per year and would create an $18 billion increase to the overall economy.

The restaurant industry currently employs an estimated 13 million people, or 9% of the U.S. workforce. It is estimated that for every $1 million in restaurant sales, an additional 33 jobs are generated.

As we enter a hopefully better year, what has been gained from one of the most difficult economic times in history? We are better managers and leaders. Businesses have adjusted to doing more with less, which includes operating with fewer people and less capital, but still delivering quality products and service. Many businesses engaged creative skills that had never been tapped for promotions, marketing, pricing and menu bundling. While there were some restaurant closings, a number of exciting, new restaurant concepts opened to join a strong portfolio of existing operations throughout Georgia. We will emerge as a stronger industry with these paradigm shifts serving us well in the future.

Winner: Jason Howell , Atlanta District Manager, Royal Cup Coffee

Since the 1890s, when founder Henry T. Batterton’s fresh, flavorful coffee became known as the “Royal Cup of Coffee,” the Birmingham, AL-based company has been serving up hot coffee to people around the state.

Since 1958, the importer, roaster and distributor of premium coffees and teas has been distributing more than 30 varieties of coffee to hotels and restaurants.

As Atlanta District Manager, Jason Howell works with restaurants to develop customized packages of equipment and coffee servers, depending on a restaurant’s needs and what they’re trying to accomplish. Having been a part of the restaurant industry himself, he understands each individual restaurant’s unique needs, and works with local Royal Cup Coffee representatives to ensure restaurants are satisfied with the company’s service and product.

The company purchases large quantities of coffee beans, which allows the company to pass on the value and bulk purchasing to its customers, helping the company keep prices down and be more profitable as well.

For Royal Cup Coffee, however, it’s not just about getting the best bean at the lowest cost. The coffee and tea company works with the Rainforest Alliance to purchase certified-sustainable coffees from farms where workers are provided fair wages, decent housing, schools and access to health care.

Aside from his work managing Royal Cup Coffee operations in the metro Atlanta, Augusta and Athens areas, Howell is also active within the restaurant industry and the community, supporting several nonprofits. He is also involved with the American Culinary Federation Atlanta and Athens chapters, as well as on the GRA’s board of directors. He was named the 2008 and 2009 Manager of the Year Southeast Region for Royal Cup Coffee.

His first job in the restaurant industry was when he was 14 years old as an oyster shucker and busboy at Palmer’s Seafood in Savannah. He has been with Royal Cup Coffee since 2004.

Advice to those just starting out: “Number one: Work hard – very hard. Number two: Be a business partner, whether you’re a chef, restaurateur, salesperson or otherwise, not just a vendor selling a product, or an operator trying to source goods and services. We can all learn from each other and help each other be successful. Number three: Give back to the industry and people that support you financially,” he advises.

Best job he ever held: “My current position with Royal Cup Coffee. Royal Cup Coffee is a family-owned and-operated company with a commitment to producing the finest coffee and tea products available anywhere, plus sensational customer service. The Smith family, [which owns] Royal Cup Coffee, also maintains a commitment to [its] employees and their families, numerous charitable and industry organizations (including the GRA), as well as their treasured customers, and that commitment is cultural within Royal Cup Coffee,” he says.

Industry Partner of the Year Finalists

• Chris Coan, General Manager, Business and Government Markets, Gas South
• Barbara Waters Wilson, Marketing Project Manager of Georgia Power

Winner: Holly Elmore, founder and Executive Director of Green Food service Alliance

If you had to pick two words to describe Holly Elmore, they would be “passionate” and “driven.” The founder and Executive Director of the Green Foodservice Alliance (GFA), an affiliate of the GRA, has been instrumental in encouraging those in the foodservice industry to take action now to reduce its impact on the environment.

After a stint in the corporate accounting world, Elmore began her career in the foodservice industry when she launched Executive Catering & Events. Over the next 15 years, Elmore operated the corporate catering company along with two successful restaurants in the Atlanta market.

Something felt like it was missing though, so she changed directions. In 2007, she launched GFA and hasn’t looked back since.

“These are amazing times,” Elmore says. “The foodservice industry is mobilizing and changing its industry practices. It is thrilling to be one of the many catalysts motivating an industry to create new operating standards.”

One of the first, and most impactful, initiatives launched by GFA is the Zero Waste Zone, which focuses on downtown Atlanta’s convention district and participating foodservice operations. More than 10 companies, including the Georgia World Congress Center and Ruth’s Chris Steakhouse, have pledged to recycle, reuse spent grease for the local production of biofuel and compost or donate food residuals to decrease the amount of waste going to landfills. Plans are in the works to expand the zones to other areas within Atlanta, across Georgia and throughout the country.

Major industry trends in 2010: “Sustainability and integrity is more than a trend; in the near future these virtues will be demanded of corporate executives to maintain successful businesses in the new economic climate. It no longer works to only be concerned about a business’ profitability and its impact on the immediate community. Businesses must understand the environmental impact of their raw material purchases and the results their product has within the global community,” she notes.

Most pressing challenges facing the industry: “The current economic tide is serving as a cleansing device for the industry. Creative operators with flexible business models will ride the tide of evolution to phenomenal results. Adapting to customer demand for value is a key to success. Each operator must evaluate their own customer base to determine how to entice their customers to dine in their establishment. No one solution will work for the industry; these are times for creative exploration,” she adds.

Her greatest accomplishment: “Creating the Green Foodservice Alliance is the result of being true to my heart and not following a logical path. I am honored to be the engine behind an organization that is making national news and evolving the standard operating practices of the second largest industry in the nation,” says Elmore.

Innovator Award Finalists

• Bill Johnson, Senior Principal,The Johnson Studio
• Patrick Gebrayel, Executive Chef, Dunwoody Country Club

Winner: Patrick Cuccaro, general manager of Affairs to Remember Caterers

Combine a theater background, an advertising career and an ever-present love for food, and you have a recipe for Patrick Cuccaro’s career path. With more than 20 years of hospitality experience, Cuccaro now helps to set the stage at Affairs to Remember as its General Manager.

“It has been my privilege to create a business environment that places respect and innovation at the top of its priority list,” says Cuccaro, who joined Affairs to Remember in 1990. “Crafting a company driven by strong core values was a very big challenge, but it also represents my greatest sense of accomplishment.”

Cuccaro not only oversees the work of the company’s catering consultants, but he also manages Affairs to Remember’s internal culinary research and development, human resources, community and public relations and marketing.

Cuccaro is also a founding member and President Emeritus of the Off- Premises Caterers’ Coalition of Georgia. He serves on the GRA’s board of directors, where he cochairs the Off-Premises Caterers Roundtable.

His latest project is a three-day training course, catering boot camp, developed for the GRA to help restaurateurs who are cultivating catering as a secondary revenue source. He also helms the nonprofit initiative Legacy 2×10, which helps organizations afford luxury fundraising services through in-kind donations of catering and event services. Since the program’s inception in 2007, they’ve already donated $1 million in in-kind services to charitable organizations.

“Those who know me understand that contributing to others gives me great pleasure,” Cuccaro says. “To be nominated for doing something that I do out of sheer force of nature is doubly gratifying.”

What the restaurant industry means to Georgia: “As recently as 25 years ago, Georgians yawned when the Ritz Carlton brought a world-renowned chef to open its new Dining Room. Today, celebrity chefs abound and consider Atlanta to be fertile territory, and some of our best homegrown chefs from all over the state are receiving national awards and attention. Georgia’s foodservice industry holds the promise of long-term, rewarding careers for those professionals who chose to master the skills required,” he says.

Major trends for 2010: “Many families have begun to place a higher value on at-home dining. While some restaurateurs might find this an alarming trend, others see it as an opportunity to provide inhome meal replacements and catering. Indeed, Off-Premises Catering will continue to be a revenue powerhouse when it comes to enhancing the bottom line,” says Cuccaro.

Advice to those just starting out: “Try to put yourself in the presence of the best possible talent. Look for the best company, not the best instant deal. At Affairs to Remember, you start at the bottom, even if you have proven industry-specific experience, and you work for the rewards. It takes time, at least three years, just to get the lay of the land. If you want a rewarding career, you must simply look for the best possible environment,” he notes.

Distinguished Service Award Finalists

• Kat Cole, Vice President of Training and Development, Hooters of America, Inc.
• Bobby Donland JR., Executive Managing Partner/Owner of Donland and Geenbaum’s New York Prime-A Steakhouse

Winner: Hank Clark, partner, Marlow ‘s Tavern

A 23-year veteran of the restaurant industry, Hank Clark has served as Market Partner for Aqua Blue and Marlow’s Tavern since 2002.

Clark studied business administration at Oral Roberts University in Tulsa, OK, and began his restaurant career with Brinkers International. Seven years ago, he teamed up with John Metz, chef and co-owner of Marlow’s Tavern and Aqua Blue, to launch and run the two successful concepts in the Atlanta area.

“I fell in love with the daily action that takes place in restaurants,” says Clark, who adds that creating the Marlow’s Tavern concept has been his greatest achievement. “To take something from a blank piece of paper to a place where thousands of people enjoy great food and beverage daily is a great feeling.”

Clark is dedicated to the development of the Atlanta-area foodservice industry. He sits on the GRA and GRA-PAC board of directors and is also Chairman of the Government Affairs Committee. He has also leveraged his business success to help the Special Olympics over the years and champions political advocacy within the restaurant industry.

“I am trying to give back as much as I can to our industry,” Clark says. “I have been blessed by having been surrounded by people that have given their time and money to help me be successful. Now I am at the place in my career where I am able to give back and help the next generation of leaders in our industry.”

Major trends for 2010: “Restaurants must continue to offer great value for their services. Personalizing guests’ experiences and getting to know your loyal base, as well as new guests, will become more and more important. In tough economic times, people are very intolerant of mediocre experiences, so a stronger focus on daily execution must happen,” Clark says.

Most rewarding part of his career: “Seeing so many of our hourly employees become leaders in our management ranks. We promise an opportunity to grow and advance within our company, and seeing people take advantage of that opportunity makes me tremendously happy,” he adds.

Advice to those just starting out: “Find great mentors and set a plan for advancement with them. Learning how to set goals and how to go after them daily with measurable results is key to advancement. If someone wants a career in the restaurant industry, I would also recommend a culinary degree. Even if your aspirations aren’t to become a chef, having great knowledge of food is something you can use to jump ahead of everyone you are competing with,” he says.

What motivates him: “I am motivated by the desire to succeed. I know that if I don’t give my best daily, I am letting hundreds of our people down. They expect great things from our leadership team, and I wake up daily thinking about that.”

Restaurateur of the Year Finalists

• Mark and Nancy Oswald , co-owners/franchisees, Ruth’s Chris Steak House
• Niko Karatassos Director of Operations, Buckhead Life Restaurant Group

Winner: Karen I. Bremer, consultant , Bremer Consulting

For more than 30 years, behind the doors of Dailey’s and City Grill, tucked into the kitchen at Mick’s and the Pleasant Peasant, there was Karen Bremer. Since 1981, she has been there, working to build a business, helping to strengthen the city’s restaurant industry and taking countless employees under her wing.

As President of the Peasant Restaurant Division of the Atlanta Dining Group, Bremer was the chief officer in a $26-million, multiunit, high-visibility citywide operation. In her first year as president, she increased the revenues of her division by 6% and overall profits by an impressive 7%. After three years as president of the Peasant Restaurants, she assumed ownership of two of its most popular restaurants, Dailey’s and City Grill, and began her own Atlanta-based company, Great Hospitality, LLC.

However, it is her commitment and dedication, her responsibility to the restaurant industry and her employees that drive Bremer.

“When one is in a leadership position and responsible for other human beings, I think you have the responsibility to give back to your community,” she says. “We take, so, therefore, we give back. I was brought up in a home where volunteerism was considered to be a part of who you are.”

She has served as past president of the Georgia Restaurant Association, treasurer of the Georgia Hospitality and Travel Association and was appointed in May 2002 to serve on the board of directors of the National Restaurant Association. She is on the board of directors of the Atlanta Convention and Visitor’s Bureau and a member of the executive board of the TEAM Georgia.

Although she didn’t know it at the time, the seeds of Karen’s career in the restaurant industry were planted when she was just 15 years old as a checker for S&S Cafeteria.

She went on to major in public relations, but after an internship with WR Grace Restaurant Company helping to open restaurants in California, she was hooked.

“I just fell in love with the opening of restaurants, and making the magic of a whole team of people coming together and serving people food and making sure there was hospitality, all of that.”

She has gone on to lead a successful career in the restaurant business. Unfortunately, like many in the restaurant industry, Great Hospitality could not outlast the economic downturn. In the summer of 2009, both Dailey’s and City Grill closed.

“When I closed the restaurants, the amount of letters I received, e-mails and telephone calls from regular customers and ex-employees – there’s been a tremendous amount of support within the community and from other restaurateurs, and that’s been very uplifting,” she says.

Although the closures were difficult for Karen, she vows to remain in the restaurant industry and recently launched her own consulting company.

“There’s this next chapter on hold for me,” she says. “You know, the true measure of your success at the end of the day is not what you’ve got in the bank; it’s the difference you make on those around you. We’re supposed to leave this place in better shape than when we found it.”