Saving PRIVATE RESTAURANTS
SOME INDEPENDENT RESTAURATEURS
ARE WORKING TOGETHER TO STAY ALIVE
The alarms are getting louder and more insistent. Big restaurant chains, bolstered with giant budgets and national aspirations, are scooping up the best locations, launching massive advertising and promotional campaigns, attracting customer attention, and scoring discounts and deals from suppliers that independent operators can’t seem to match.
Most chain companies are also getting more sophisticated in dining styles and food and beverage presentation, spending more on researching and developing recipes and menus that will tickle customer fancy and keep them coming back. Many are rolling out more upscale concepts that are siphoning customers away from a part of the business where independents once were unchallenged.
The success of these upscale casual chains has become worrisome to many prominent independent restaurateurs, and in some medium and small size cities, it has created impediments to success, real or imagined. And as older, landmark businesses close and Americans continue to
shift their dining dollar to the chains, the future for the independent operator is getting dark. At least that’s the way it seems to some.
FIGHTING FOR THEIR LIVES?
Groups like the Council of Independent Restaurants of America (CIRA) make the situation sound most urgent.
According to CIRA’s call to arms: “Whether you are a neighborhood bistro, a four-star restaurant, or the trendiest place in town, you are in danger of closing for good. In the battle for market share, the national chains are mounting a well-financed, aggressive assault on the nations’ major restaurant markets…If the dinner-house chains have their way, the dining scene in most cities will soon offer the limited choices that consumers now find in shopping malls throughout America: the same 30 or 40 stores in every location.”
Are things really that difficult for the independents? Depends on where you stand. But even recent research by Coca Cola USA suggests the fine dining segment is now in direct competition with casual restaurants.
According to restaurant research firm Technomic, the top 100 restaurant chains took in 52.1% of market share last year. Admittedly, this list includes mainly quick-serve powerhouses like McDonald’s, Starbucks and Subway, but other, more upscale brands are prominent achievers as well, like Outback Steakhouse, Olive Garden, Chili’s, Applebee’s and P.F. Chang’s.
According to NPD Group, one of the leading providers of food consumption patterns, the little guys, while struggling, are still a major force in the restaurant business. Grouped with small chains, the two account for 58% of dollars spent in restaurants.
But independents and small chains haven’t fared as well during the recent weak economy, according to NPD and other reports. Just as CIRA claims, the smaller operations suffer from lack of big bucks for marketing and expansion. During weak economic times, chains tend to take market share from independents, says NPD. And last year, traffic was down in all parts of the country for independents.
The main problems for independent restaurants, as CIRA co-founder Bob Kinkead, eponymous owner of a restaurant in Washington, DC, sees it, is that chains are moving rapidly into areas where independents are easily out-gunned. “The small guy who might have to sell his car to get enough start-up money together just can’t compete,” he says.
At the beginning, aspiring indies are driven to second and third tier locations and find it difficult to compete on many levels as dinner house chains grow. “They’re putting our backs against the wall,” says Kinkead.
John Folse, owner/operator of Lafitte’s Landing in Donaldsonville Louisiana, and the White Oak Plantation in Baton Rouge, acknowledges the challenges wrought by the growth of upscale casual dining chains. “There’s no doubt about it, the distance between upscale casual and fine dining is shrinking. Fine dining needs to stay true to its traditions, but the public is so savvy about food and drink and travel today that we’ve had to relax our atmosphere. We can’t relax the quality or innovation of our food, though. Fine dining will continue to serve an upscale market looking for that extra something in culinary creativity.”
Groups like CIRA and DiRoNA (Distinguished Restaurants of North America) are doing their best to hold onto their share, banding together to share resources and information, to create marketing ideas and, in some cases, pooling funds to bulk up their buying power. In some cities, ad hoc groups of operators are independently finding ways to work together, using group buying power to compete for sparsely allocated wines, for instance, or to promote locally owned and operated businesses.
In some of its 17 chapter cities, CIRA has helped organize buying coops (Kinkead says they have been especially successful in Tucson and Phoenix) and the Washington, DC, chapter has started planning for a cooperative advertising buy. Individual CIRA city chapters determine as a group what efforts to undertake in their areas. “What works in DC may not work in Kansas City,” says Kinkead. CIRA also likes to remind its customers that independent restaurants are more likely to recirculate profits in the local community.
GAME NOT OVER
Independent restaurants still have an advantage when seen as a dining destination or special occasion spot. NPD reports that 85% of beverage alcohol sold is ordered at small chains and independent restaurants, with 65% of tea orders, 67% of juice orders and 81% of bottled water orders coming from this segment. (Small chains are defined as those with more than three units but not in the top 100 chains in size. NPD gathers its figures from consumers who fill out daily reports about their behavior.)
While CIRA encourages all independents to join or start chapters and currently boasts more than 600 members, fine dining restaurants at the top of their game already have DiRoNA. While not sounding the same sort of alarm as CIRA, DiRoNA does work to make certain that their
members stand out in an ever more crowded dining scene.
DiRoNA defines each member as “[A restaurant] that stands apart from all others. It is characterized by excellence in all facets of the dining experience – food, beverages, service and environment. Distinguished dining consistently provides high quality, value for the dollar and a memorable experience.” DiRoNA members are selected by anonymous evaluators using a standardized scale to judge potential members.
Currently, more than 800 restaurants are members , but DiRoNA doesn’t discriminate against chains there are five Ruth’s Chris Steakhouses which have made the grade, for instance, listed near such venerable members as Anthony’s Pier 4, Boston, and I Ricchi, Washington, DC.
John Folse, currently overseeing DiRoNA’s marketing and communication committee, says DiRoNA’s member’s, like The Sardine Factory in Monterey and Commander’s Palace in New Orleans, join together at regional and national meetings, as well as informally, to share information and to make certain that their profile stays high.
DiRoNA’s new public awareness campaign, for instance, focuses on increasing awareness of the DiRoNA brand among key consumer media, educating DiRoNA members on the value of the award, increasing consumer traffic to the organization’s website (www.dirona.com) and urging consumers to refer to the DiRoNA Guide, published annually, as a resource.
CIRA, meanwhile, aims to add 12 or so chapters within the next year, mostly in medium sized cities. Rustbelt cities in the Midwest and in the growing Southwest have been especially receptive to starting chapters, although New York and other cities where independents are thriving haven’t been as responsive so far.
The Council of Independent Restaurants of America (CIRA) was founded in 1999 by a group of independent restaurateurs who believed that it was important to protect the independent entrepreneurial restaurants in America and to establish a proactive marketing program to meet the challenge of national dinner-house restaurant chains.
Bob Kinkead of Kinkead’s Restaurant in Washington, D. C. led the charge, joined by
fellow restaurateurs Larry Work of Sam & Harry’s, also in Washington; Marcel Desaulniers of the Trellis in Williamsburg; Sandy D’Amato of Sanford in Milwaukee; Don Luria, Cafe Terra Cotta in Tucson; Wayne Kostroski, Goodfellow’s in Minneapolis; and Louis Osteen, Louis’s at
Pawley’s, South Carolina. Others quickly followed.
CIRA exists to promote dining in independently owned restaurants and acts as a marketing association offering both public relations and advertising initiatives. CIRA’S public-relations program helps develop stories and generates editorial material for trade and consumer publications and the electronic media to generate positive response by the public to the independent restaurant as the destination of choice. CIRA also offers cooperative buying advice, acts as a resource to its members on management questions, financial issues, labor concerns, training, trends in concept development and on menus, merchandising, recipes and food.
“Originals” are all members of the Council of Independent Restaurants of America (CIRA). The fifteen “Originals” chapters are located in Albuquerque, Birmingham, Charlotte, Cleveland, Columbus, Indianapolis, Kansas City, Madison, Mid-Michigan, Milwaukee, St. Louis, Sarasota, Tucson, Twin Cities, and Washington, D. C. Chapters are also in formation in Grand Rapids, Chicago and Denver.
Most recently, all chapter presidents met with the board of directors to create a strategic vision for the organization and share marketing programs that have proved successful at the individual chapter level.
More than 750 restaurants in Canada, Mexico and the United States hold the DiRoNA Award of Excellence, with new members added each fall. The restaurateurs are able to display their award certificates and become part of the organization’s comprehensive marketing program. Additionally, “The Guide to Distinguished Restaurants of North America” is published annually and provides information and full-color photographs of each restaurant that wishes to purchase a page. Consumers may purchase the Guide in bookstores, online and from many members.