ARTICLE   THE ROANOKE TIMES  April 11, 2010
By Jenny Kincaid Boone and Lindsey Nair

Restaurants Show Survival Strategies, Owners seek new ways to lure customers and save money

In March, Norberto Silva celebrated the anniversary of his little Italian restaurant, Norbertos's which opened in Roanoke 25 years ago.

He also celebrated the fact that 2009 is in his rearview mirror.

Like many restaurants across America, Silva's didn't fare well last year. The summer months were the slowest in his restaurant's history, he lost a weekend of business in December to a snowstorm and his bank wasn't interested in issuing him a loan for business costs,

Overall restaurant traffic dropped 3 percent nationwide last year, according to a market research report from NPD Group. It was the first decline in more than three decades for an industry that is integral to people's lives. Each day 40 percent of Americans visit a restaurant for a meal, NPD reported.

Nationally, it may take much of 2010 for the food service business to pick up where it left off before the economic downturn, analysts say.

Many of hte factors that sparked the nation's recession still plague consumers locally and nationwide. Nearly 15 million Americans are out of work, while others are concerned about job security, stagnant wages and changes in health care benefits.

As a result, those who still dine out do so with a new sense of frugality, choosing restaurants based on specials, joining dining clubs to score coupons or ordering takeout instead of dining in. Because people are spending less, some restaurants in Southwest Virginia have closed, stopped hiring or cut back hours.

But the year wasn't dire for every local restauranteur. For some sales stayed flat between 2008 and 2009, which they considered a sign of resilience, not stagnancy. And for a few, there were even small increases in business and opportunities to open new locations.

Said Chad Scott, executive chef at 202 Market in downtown Roanoke, "I personally think Roanoke hasn't seen the kind of lows and highs economically that a vast majority of the country has in the past year and a half.

Plenty of Challenges
Bridget Meagher, owner of Alexander's in downtown Roanoke, wishes she could create a few more jobs. But that's not possible until revenues perk up.

For now, the longtime restauranteur is happy that she has not had to lay off any staffers in the past year at her high-end dining establishment on Jefferson Street. Sales at Alexander's were down 17 percent last year.

Nationally, more people are dining at moderately priced restaurants instead of high-end eateries, said Darren Tristano, executive vice president of Technomic, a Chicago food industry research firm. In fact, fine dining establishments have been the hardest hit.

Diana Dixon said she opened her Troutville restaurant, Pomegranate, just as the economy was "tanking". She said although she intends to survive the recession, it has been difficult.

"We have had businesses plan events and then cancel because their business dropped off," she said. "People tell me that they do not eat out as they used to even though they love us."

Of the 20 chefs and restaurant owners interviewed for this story, at least half said sales had been down in 2009 over the previous year--as much as 15 percent in some cases.

With economic pressures came another blow; three snowstorms that killed weekend business this winter. Restauranteurs also said high electric bills and the start of the smoking ban on Dec. 1 were factors for a bad year. For some, a Roanoke meals tax increase now compounds those worries.

As restaurants' customer base shriveled last year, so did another important cash source; bank financing.

Ben Ward, general manager of the Isaacs Mediterranean Restaurant, said funding a late 2008 expansion at the Roanoke restaurant turned into a nightmare. After First National Bank committed to paying 80 percent of the value of the finished project, Ward said, the bank was sold and became StellarOne.

He said StellarOne sent in its appraisers, who lowered the value of the property, therefore lowering the amount the bank was willing to lend. As a result, the business got $211,000 financing for a project that cost almost $800,000. Fortunately, Ward said, he could turn to investors for help.

The lack of financing created other challenges such as the freedom to pay food vendors ahead of time and cultivate relationships with local food producers, he said.

"The whole thing is messed up  because businesses need lines of credit," Ward said. "We are as successful as a restaurant can be. We are packed every weekend, we are running at maximum capacity, but it doesn't make a difference, We are being taken advantage of by the banks."

Ward's situation is not unusual. Since late 2008, it's been difficult for many small businesses to obtain financing. The cyclical nature of a restaurant makes it a risky venture, said Greg McBride, senior financial analyst for Bankrate.com.

A restaurant's success is based on discretionary spending, which decreases during bad economic times.

"If you're to lend money to somebody, you're looking at it from the standpoint of 'Are you going to get paid back?'" McBride said.

Restaurants get creative

Meal deals are a beacon for Stephanie Tucker, a single, working mother of two who lives in Roanoke County. Tucker can rattle off the name of every restaurant that has a "kids eat free" night and recently joined the International Dining Club, which costs $40 a year and offers a thick stack of coupons for two-for-one meal deals at participating restaurants.

Barry Lazarus, president of the Richmond-based business, said it's membership in Southwest Virginia shot up 10 percent in 2009.

For the foreseeable future, restaurants are expected to cater to patronssuch as Tucker. In 2008, the number of restaurant meals purchased with a special deal rose 6 percent, according to the NPD Group. In 2009, that figure grew an additional 2 percent.

Gone are the days when customers were embarassed to flash coupons to save money, said Tristano of Technomic.

To adapt to this new consumer attitude, some restaurants have sought new ways to lure customers and save money.

Henry Caldwell decided several months ago to open his Roanoke eatery, Henry's Memphis BBQ, on Sundays. He hopes the move will boost sales at his restaurant, which he opened in 2005. Henry's Memphis also has locations in Salem and Christianburg.

In Roanoke, Sunday hours have increased catering business, Caldwell said, but dining room sales have been slow to pick up.

At Martin's Downtown Restaurant & Bar in Roanoke, owner Jason Martin is thrilled that his half-price burger nights on Mondays continue to be a huge success. He said he is thinking about creating a similar special, perhaps with ribs, on Tuesday night, which are now his slowest evening.

Like some of his peers, Ward has sought less expensive, more creative ways to advertise his product. This guerilla marketing includes use of social networking sites such as Facebook and Twitter, as well as mass emails to interested customers with details on the latest food specials and entertainment.

Other Roanoke restaurants use email marketing include Local Roots Cafe, 202 Market and Blue 5. Taphne Volinskus, owner of the Journey's End Restaurant at the Davis-Bourne Inn in Independence, also sends out regular email updates and recently booked a wedding through the Inn's Facebook page.

"The only upside to this economy is that it has forced me to take the time to learn new marketing techniques to reach a broader audience," she said.

Growth will continue

The year wasn't dismal for all restaurants. For some, sales matched or surpassed other years.

"Flat is the new growth for 2009", said Eric DiLauro, who owns Table Fifty in downtown Roanoke. Sales at his restaurant were the same in 2008 and 2009. He recently decided to open on Monday nights based on strong February sales.

Similarly, at Wildflour Market and Bakery in Roanoke, owner Doug Robinson said 2008 was a record year and 2009 matched it. Key is the restaurant's focus on casual dining with moderate prices, Robinson said.

"We don't have white linen tablecloths," he said.

202 Market in downtown Roanoke is more upscale, but Scott, the executive chef, said that after a late 2008 slump, sales rebounded nicely in 2009 and are still strong. He attributes 202's success, in part, to the restaurant's casual menu in addition to fine dining options.

And some restaurant's are still growing.

Cheddar's Casual Cafe, a Texas-based chain, plans to build a restaurant adjacent to Roanoke's Valley View Mall in October. It's one of 10 to 12 Cheddar's planned this year.

"We feel good about what we do and how we fit in with the consumer," said Rick Payne, a senior vice president at Cheddar's, emphasizing the chain's focus on value and traditional American food.

Doing extensive homework is more important than ever. Dominic Marletta, owner of Mamma Maria's Italian Restaurant in Salem, sat in the paring lot at Lakeside Plaza in Salem for up to five hours at a time, watching traffic flow before he opened Mamma's Pizza there in March.

He said that he figures the New York-style pizza joint wil thrive in a part of Salem where pizzerias are sparse. Also, Marletta believes pizza can weather slow economic times, because a family of four can order pizza and soft drinks for $20, he said.

In 2009, Ward and a partner were able to open a second restaurant, Meze World Cafe, in downtown Roanoke, despite penny-pinching at The Isaacs. He said he could not have done it without the cooperation of Meze's landlord, Steve Musselwhite.

Musselwhite was willing to try an unusual lease agreement where the tenants pay a flat fee every month, in addition to a variable portion of the monthly sales. He said that allows him to become more successful asthe restaurant grows.

"Certainly in these economic times, you've got to be a little bit creative about the way you do things," Musselwhite said. "I feel like that's what God has called me to do--to be fair and work with people."



PRESS RELEASE

FOR IMMEDIATE RELEASE
Today’s Date: April 5, 2010
Media Contact: Taphne Taylor

Quilts of the Blue Ridge Show at the Davis-Bourne Inn
Artist in the Parlor Series

Independence, VA – The final segment of the 2010 Artist in the Parlor series will be “Quilts of the Blue Ridge” beginning April 16-24. The exhibition will feature quilters of all techniques, styles and ages from the Blue Ridge communities of SW Virginia and NW North Carolina and will be open the same hours as the Gallery at the Inn which are regular dinner hours of the Journey’s End Restaurant and other times by chance or appointment. Some of the quilts will be available for purchase. Currently scheduled to participate are Ruthanne Sawyer, Barbara Moncrief and members of the Sparta Quilt Guild and the Mountain Home Fiber Guild.  A photography infused glass show entitled “Home” by Vanessa Wright Hollifield remains available through the end of April.

Several of the quilt exhibiters have taken classes by Linda Fiedler who will be conducting a weekend workshop “The Art and Soul of the Quilt” at Chestnut Creek School of the Arts on April 23-25 in Galax and several will be participating in the upcoming Mountain Home Fiber Guild exhibition “Today’s Mountain Woman” at the Sparta Library beginning May 1.

The Journey’s End Restaurant continues with its Comfort Fest offering healthier versions of your favorite comfort foods in a four course dinner for $12-. Recent items were toasted mac and cheese, turkey pot pie, oven baked catfish with Ritz cracker cole slaw and veggie lasagna. The recently refreshed regular dinner menu now offers more seafood with Mussels Provencal and Tilapia Mediterranean in addition to our pan seared salmon with sun-dried tomato vinaigrette, crab cakes and the coconut curry shrimp and Mountain Memories Farm’s lamb chops are available pan roasted with a rosemary plum sauce.  Become a fan of the Journey’s End on Facebook or check our new Journey’s End Restaurant website, www.journeysendrestaurant.net for the current specials and Facebook discounts. Watch for the Summer Tapas Festival starting Mother’s Day weekend.