Sales Growth for the Greater Southeast Region
WILMINGTON, N.C.-- (NATION'S RESTAURANT NEWS) -- January 09, 2005 -- Restaurants in the five-state Atlantic Coast pocket from Virginia to Florida, along with Tennessee, are expected to lead the expectedly strong sales growth of the greater Southeast region during 2005, based on expanding jobs, personal income and population.
Despite those conclusions, derived from a survey of operators across the eastern half of the Sunbelt, industry leaders in Georgia believe that their state will eclipse the entire region's upward revenue track this year. Forecasts call for Georgia to see a growth spurt exceeding 6 percent to drive Peach State foodservice sales beyond $11 billion for the first time in history.
Those predictions appear to support the bullish 5.5-percent revenue growth outlook for the Southeast by the National Restaurant Association in its 2005 Restaurant Industry Forecast. The NRA predicts that total sales for the 12-state Southeast region, extending westward through West Virginia, Kentucky, Alabama, Mississippi, Arkansas and Louisiana, will hit $84.5 billion for 2005, up from $80.1 billion last year.
Orlando, Fla.-based Tijuana Flats plans to open 40 new locations by 2006, in Alabama, Georgia, Kentucky and Indiana, according to chief executive Camp Fitch.
" Yes, the economy over the whole region is strengthening, but in Georgia we're looking great for 2005, " says Ron Wolf, Georgia Restaurant Council's executive director.
Indeed, the NRA sees Georgia's foodservice sales growth hitting $11.4 billion this year, a 6.3-percent increase over the statewide mark of $10.7 billion for 2004.
" Restaurants that have been operating with leaner crews are continuing to build up their staffs, " Wolf adds. " In short, we're very optimistic for the year ahead. We and many of our neighbor states are going to do better than most of the rest of the nation. "
Wolf's comments echo those made by operators in Florida, the Carolinas and Tennessee, who expect their biggest challenge will be developing and attracting enough high-caliber employees to keep pace with ambitious growth plans.
" People are the hottest commodity in our industry, " says Ray Holden, president of Jupiter, Fla.-based Ale House Restaurants. " That's why we're continuing to develop our staff and management aggressively this year as we make ready for a solid 20-percent growth push beginning in 2006. "
The people factor also plays big in growth plans for 160-unit, Tampa, Fla.-based Beef O'Brady's, a neighborhood pub brand, and for the 70-unit, Wilmington, N.C.-based gourmet coffee shop and café chain Port City Java®. Both of those chains operate in 13 states, including most of the Southeast.
Likewise for Nashville, Tenn.-based Moats Enterprises, whose chief executive, Ted Moats, developed the Logan's Roadhouse chain before selling it to Cracker Barrel's parent, CBRL Group Inc. of Lebanon, Tenn.
In 2003 Moats began developing the Wolfgang Puck Express brand in Georgia and Florida.
" It doesn't matter how hot the concept is; it takes well-trained and motivated people to staff and manage successful restaurants, " says Beef O'Brady's president, Nick Vojnovic. " This has always been a challenge, and it's just getting bigger. "
Aggressive franchising plans for 2005 could bring greater growth for Beef O'Brady's within the region and see the chain advance into five new states Colorado, Indiana, Nevada, Tennessee and Virginia, Vojnovic says.
Areas picked by the company's expansion team include suburban communities boasting young-family demographics and lying just outside of major growth markets where sites can be had for lower investment.
" The Southeast is full of those pockets, " Vojnovic says.
Don Reynolds, Port City Java's® founder and president, says his group is scouting sites at the rate of more than a dozen a month to keep pace with at least one new store opening a week through the first quarter of 2005. At that time the expansion rate will double. " We're getting signed and paid commitments to add 12 new stores to the system every month, " Reynolds says.
Florida-based Ale House Restaurants plans to add three to four units in 2005 and six to eight units in 2006.
According to Holden, the casual-theme Ale House group, which operates the majority of its 38 locations in Florida, plans to add between three and four new units in 2005 and six to eight units in 2006.
Ale House and its growth-minded peers in Florida and surrounding states see opportunities virtually throughout the region.
The company already has taken a modest step into Georgia and North Carolina, and both of those states are targets for continued expansion after 2005, Holden adds. Meanwhile, Florida remains a lucrative home base for the high-grossing chain.
" The economy is very good in Orlando and several other Florida markets, " Holden says. " I see our sales spiking nicely at this point, " he adds.
Factors at play in the expected foodservice momentum for most of the Southeast are the same economic benchmarks that support growth in other industries.
For example, Georgia's disposable personal income is expected to explode by 4.6 percent in 2005, with North Carolina following close behind at 3.9 percent.
Meanwhile, Florida will be capturing a 3.1-percent jump in employment this year a rate 72 percent higher than the 1.8-percent gain expected nationally. And Georgia and Florida, respectively, will have population gains of 1.7 percent and 1.9 percent, both exceeding the national growth rate of 0.9 percent.
As the region's largest foodservice state, with nearly 40,000 dining establishments of all types, Florida will have a revenue this year that is forecast to hit $19.9 billion. That is up 5.6 percent from the total of $18.9 billion in 2004 despite the four hurricanes that shut down the tourist economy for more than a month last fall.
Another growing Florida chain, 22-unit, Orlando-based Tijuana Flats, opened its first Kentucky and Georgia locations in 2004. Tijuana Flats also debuted in Fort Walton Beach, Fla., four days after the arrival of Hurricane Ivan and opened three other Florida restaurants.
In mid-2004 the fast-casual brand's president and chief executive, Camp Fitch, predicted that Tijuana Flats would add 40 new locations by the end of 2006 in new markets in the states of Alabama, Georgia, Kentucky and Indiana.
" Economic considerations are important, but we're also deeply focused on qualifying and carefully aligning with strong and experienced partners, " says Fitch, noting that the chain's eighth Orlando-area unit opened before year-end.
Even in Southeastern states like West Virginia, Louisiana, Kentucky and Alabama, where the overall economic pace is less vibrant, real restaurant sales still will expand modestly, and industry leaders and operators remain optimistic.
Louisiana is expected to see growth of 4.8 percent in 2005, with sales hitting $5.2 billion. Meanwhile, foodservice revenues in Alabama, Arkansas and West Virginia are forecast to hit $4.6 billion, $2.4 billion and $1.7 billion, respectively.
Veteran Louisiana operator Ralph Brennan, like his peers in neighboring Arkansas and Alabama, calls himself cautiously optimistic for the year ahead.
" Convention and visitor traffic in New Orleans continued to improve in 2004, and the local economy looks generally good, so we are going to grow a little bit this year, " reports Brennan, whose well-known properties in the city include Ralph's on the Park, Red Fish Grill and Bacco.
But tourist-dependent restaurateurs in New Orleans also are awaiting resolution of a court battle among contractors over a 500,000-square-foot convention center expansion project that is expected to grow business markedly when it is completed.
" That project will take our exhibit space capacity to 1.6 million square feet and will really add to the aggressive marketing efforts by local hotels, " Brennan says. " When I look at convention bookings, I see the trend continuing to track up. "
Like other Florida chains boasting at least a fifth of their total revenue from bar sales, Ale House suffered for several months after the state's voters approved a constitutional amendment that banned smoking in restaurants and indoor work spaces in 2003.
" We took a hit after the nonsmoking amendment, but we've been recovering those lost sales, " Holden reports. " What happened was some of our clientele had to change their habits, and we also began accommodating smokers in designated outdoor dining areas, so that business is back now. "
About the Port City Java® Brand
Port City Java® is located in Wilmington, NC. The Company opened its first café in March 1995, in Wilmington, NC. The Company began Roasting in October 1995 and Franchising in September 2003. Port City Java® has created a specific identity by creating an " all day approach " to sales, through its café environment. For additional information regarding Port City Java®, please email us.
