By Steve PerezIn the face of a report that shows area restaurants at risk in the current economy, local restaurateurs are trying to get the message out that people should support their industry.
The report, commissioned by the local chapter of the California Restaurant Association, shows that the failure rate of restaurants is likely to be higher than in recent years, according to Kent Sims, the San Francisco economist who began probing the local industry in February 2008.
He projects that 3 percent to 5 percent of local restaurants may not be in business next year. That falls roughly between the normal failure rate of 2 percent to 3 percent in any given year, and the 7 percent reduction he observed in the Bay Area in the aftermath of the “dot com” crash and post 9/11 concerns, he said.
Large employerThe study also found that restaurants are a big part of the local economy, employing 105,000 workers, or 8 percent of all private employment. The median hourly wage, which takes tips into account, is $28 an hour.
Meanwhile, based on information from WSL Strategic Retail, the Wall Street Journal reported last week that “more Americans are eating at home, eating at lower-priced establishments and picking lower-cost items from menus.”
Lehn Getz, president of the CRA’s San Diego Chapter, who owns Cafe Coyote in Old Town, is among those who say restaurateurs are appealing to the budget-conscious eaters.
“It’s now a great time, with all the local restaurants offering great values and special menus,” she said. “As the No. 1 employer in San Diego, it’s a great way to support the industry and enjoy a night out at the same time.”
Local observersAs to predicting who the local winners and losers might be, area restaurateurs were reticent.
“Every segment of the industry has strength and weakness,” said George Hauer, owner of George’s at the Cove. “I have friends who operate restaurants in lower price points, like Mexican food, that are doing very well, and fast foods as well.”
He observed that McDonald’s was one of the few restaurant-related stocks in the S&P 500 that gained ground in 2008.
Other owners are bullish on their own prospects.
Count Robert Vigilucci, owner of seven restaurants from La Jolla to Carlsbad, among those. In the face of severe economic headwinds, Vigilucci is sailing ahead with plans to open another restaurant in Coronado this year.
Improvement ahead?“The good news is, the economy will turn around. It will get better,” he said. “Obviously, it would be better if it was not (slow), but it is what it is. Business at our other locations is pretty good, so, I think we’ll be OK.”
Others, such as Mike Morton Jr., president and CEO of the Brigantine Family of Restaurants, including locations in Azul Steakhouse in La Jolla and the Brigantine in Del Mar, say they hope the number of restaurateurs in business doesn’t drop drastically.
“I personally really hope that’s not the case,” he says. “As you know, competition fosters better results and products, so I really hope the competition stays there.”