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From brisket to burgers,
Texans eating it up

Texas-Sized Appetites

The sluggish economy has affected many businesses in the Lone Star state, and restaurants and grocery stores are no exception. But Texans still have an appetite.

More Texans are ordering takeout meals and dining at casual restaurants than in years past. They are bypassing some of the higher-priced groceries for more staple items, but cash registers at the state's restaurants and grocery stores are still ringing.

The state's more than 48,000 restaurants expect to show $27.2 billion in sales in 2002, up 4.6 percent from sales for 2001, according to the Texas Restaurant Association (TRA). That's better than the national average for food service sales, which is expected to rise 3.9 percent during 2002.

The restaurant industry expects to pump more than $2.2 billion in sales tax revenues into the state's economy in 2002, according to the TRA.

Industry representatives say the state's restaurants are recovering after taking a dive in the fourth quarter of 2001 following the September 11, 2001 terrorist attacks. Despite a declining economy, which has hurt sales at many upscale restaurants, sales have increased steadily for the state's food-service industry.

"Here in my business, I continue to see moderate growth," says Ralph Sheffield, 2002-2003 TRA president and owner of Las Casas Restaurante in Temple. "In the past year, they (upscale restaurants) were hurt a little harder than the casual segment."

The slowing economy also has affected Texans' grocery lists, which contain fewer high-priced items, say grocery industry officials.

Rick Johnson, president of the Texas Grocery and Convenience Association, which represents more than 3,500 stores in the state, says sales for those stores are down.

"Sales aren't what they used to be," Johnson says. "People are not buying the high mark-up, fancier type goods. They are going back more to the staple items. I think one of the great myths is that when you're in a bad economy, people still have to eat, which is true, but people don't have to buy steak; they can buy beans."

Still, grocery store sales are rising. In 2001, Texas' more than 6,700 stores reported sales of $29.3 billion, up from $28.6 billion in 2000. The number of grocery stores, however, dropped from 6,749 in 2000 to 6,708 in 2001.

Increased competition has contributed to the closing of some grocery stores, Johnson says.

"What we're seeing is the small independent operator is the one that's closing the stores and some of the larger chains are opening more stores," Johnson says.

In the grocery aisles, more Texans are choosing ethnic foods, including Hispanic and Brazilian foods, rices, sauces and exotic vegetables, says Valerie Schenewerk, executive director of the Dallas/Fort Worth Grocers Association.

"People have broadened their horizons a little bit and are more interested in various kinds of ethnic products," Schenewerk says. "There's a lot of interest in all kinds of ethnic food products."

Hog-wild for barbecue
When Texans go out to eat, barbecue is their food of choice. According to the TRA's 2001 Texas Restaurant Industry Operations Report, barbecue restaurants showed the most sales growth in Texas in 2000. Sales were up 178 percent compared with those in 1998.

Hamburger establishments are the second most popular type of restaurant; their sales increased 82 percent between 1998 and 2000.

Sales at Mexican restaurants dipped 5.8 percent and deli sales went down 15.5 percent between 1998 and 2000. Sales at American-themed restaurants dropped 13 percent where alcohol is served, compared with a decrease of 63 percent where no alcohol is served. TRA officials attribute this trend to the fact that more restaurants are gaining licenses and permits to serve alcohol in cities that once banned it.

Asian and multi-ethnic restaurants were added to TRA's report in 2000. Multi-ethnic restaurants showed the largest sales of any category in 2000, with annual sales of $11,775 per dining seat.

"Sales at Asian and multi-ethnic restaurants have and will continue to enjoy an overall growth rate as high or in many cases higher than other segments of the business," says Scott Smith, product services representative for TRA. "I believe that is due to an increasingly diverse multinational population percentage in the state. This trend should continue with the change of the ethnic makeup of the state."

Of the 2,055 restaurants represented in TRA's survey, the largest share, 35.2 percent, were American-themed. Mexican restaurants were the next largest group, accounting for 13.7 percent of restaurants.

Houston residents Armando and Tanya Guerrero take their three children, ages 8, 11 and 13, out to eat at least once a week. Mexican food, pizza or fast- food and hamburger restaurants are the family's favorites.

The slow economy has not affected the frequency the Guerrero family eats at restaurants, Armando Guerrero says.

"We really haven't changed what we do in our daily routine," Guerrero says. "We try to do one family night out per week. If we can't go out due to inclement weather or lack of time, we order pizza, especially on Friday nights."

Hungry for business
Overall, the restaurant industry in Texas grew 7.4 percent between 1998 and 2000. While the sluggish economy forced some upscale restaurants to cut prices or even close their doors, some restaurants still attract the crowds.

"As in other periods of economic downturns, going back to the 80s, mid-level casual restaurants fare well compared to higher-ticket restaurants, sometimes with even increased sales," Smith says. "The same reasons eating out in general has increased still apply, even when people have less to spend. They still eat out--[they're] just changing the types of restaurants they choose."

A July 2002 survey by the National Restaurant Association showed that 44 percent of fine-dining operators expect business conditions will improve during the remainder of the year.

"I think we see the bottom," says Tom Kenney, president-elect of TRA and joint venture partner for Outback Steakhouse. "I'm standing on it now. After such a dismal fourth quarter last year, I think that the fourth quarter this year will be better."

Grocery store sales have risen gradually over the past several years. Between 1998-2001, grocery stores sales rose 8.5 percent, from $27 billion to $29.3 billion, according to figures from the Texas Comptroller of Public Accounts.

Still, Johnson says volume sales at individual grocery stores are down due to the slow economy.

"Your grocery bill is probably one of the few items that you have the most control of," says Johnson. "When you start trying to cut back and save money, one of the first places you look at is your food bill."

I'll take that to go
More Texans prefer fast service and affordable meals when they dine out. Between 1998 and 2000, sales at quick-service, or fast-food restaurants, jumped 117 percent. Almost 58 percent of checks at these restaurants averaged less than $10 a person.

Takeout food has become a burgeoning business for restaurants in the casual dining sector, say restaurant officials. They attribute this trend to Texans' busy schedules and the growing number of double-income families.

Sheffield says at times, takeout service accounts for 25 percent of business at his restaurant.

"You have a husband and wife, and both work," Sheffield says. "They have kids in school. They are extremely rushed to prepare a meal at home. If you can do something that's convenient and has good value, there is a tremendous need there for that."

Chain restaurants throughout the state have also picked up on the takeout trend, with restaurants such as Chili's Grill & Bar and Outback Steakhouse all expanding their takeout business, Sheffield says.

"It's what we call a home replacement meal," Sheffield says. "They [consumers] are looking for something that's already prepared and they can eat quickly."

Pre-packaged hot meals or deli fare at grocery stores are also popular among shoppers who stop at the store on the way home from work, Schenewerk says.

"Most people buy the takeout [and] prepared food when they're already at the grocery store shopping," Schenewerk says. "I see it more as 'I'm here already. This way I don't have to cook tonight.'"

When Texans go out to eat, value is increasingly important.

"We look for a restaurant with good portions, hearty meals and inexpensive menu items," says Guerrero. "Our idea of a good deal is for all five of us [to eat] for under $30, including drinks.

That sounds pretty cheap, but we think of it this way, whatever we save on the meal we spend on something else, like the movies or ice cream."

In a tight economy, restaurants that cater to consumers" desire for good value will fare well, says Kenney.

"Customers want choice and they want value," says Kenney. "The [restaurants] that do the best jobs of providing that will do the best in these tough times."

Karen Hudgins