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From fast food to fine dining, business is up at restaurants
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Three years after the $580 billion restaurant industry saw its harshest downturn in decades, there are signals that the worst may be over for an industry that suffered as people saved by eating out less.
"The glow is off the idea that cooking is fun," says Ron Paul, president of Technomic, a research specialist. "Consumers are returning to their old habits." Restaurant business is up in all sectors — from fast-food to casual to tablecloth. The dust began to clear in the third quarter, Paul says, when overall industry same-store sales went positive, following three consecutive years of negative numbers.
Families with kids started visiting restaurants in greater numbers this summer — up 1% following a three-year decline, reports researcher NPD Group.
The National Restaurant Association reports same-store sales rose in September for the first time in six months. "It's a substantially better environment than it's been for years," says Hudson Riehle, the trade group's research chief.
It's been a slog. The industry tried everything from $5 sandwiches to $10 pizzas. The driver hasn't been deals, but the economy. With about 1 million jobs added in the private sector in the past 10 months, more folks are eating out, Riehle says. More business travel and tourism are also helping.
Some are still adjusting. Tim Hortons and Ted's Montana Grill are closing units. The parent of Charlie Brown's Steakhouse filed for Chapter 11 bankruptcy protection. But things are improving:
•Upscale. After double-digit declines in 2009, steak house Morton's posted positive same-store sales for the first three quarters of 2010. "The worst is behind us," says CEO Christopher Artinian.
•Midscale. Applebee's same-store sales rose 3.3% in the third quarter. "I'm encouraged by what I'm seeing," says Michael Archer, president. "This has been the most difficult environment I've seen in 30 years." In early 2009,Ruby Tuesday stock was down to $1 a share and same-store sales had fallen double-digits. Now, its stock is above $12 and same-store sales were up 1.3% in the most recent quarter. "There's been a change in momentum throughout the industry," says CEO Sandy Beall.
•Down-scale.Hardee's, hit hard by the recession, is seeing a lift, with same-store sales up 6.8%. "From what we're seeing," says marketing chief Brad Haley, "it looks like we're in a recovery."
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