Atlanta restaurants seeing better days

A look at how operators in the city are faring after the recession

After more than two years of sluggish sales brought on by the recession, restaurateurs in Atlanta say business is beginning to improve and that they're optimistic about a rebound in 2011.

Operators in the city pointed to an increase in private parties and convention business, which they expect to continue as the holiday season nears. And while diners remain value-conscious, some restaurateurs reported that increased drink and appetizer orders are giving check averages a boost.

“The economy, I think, is starting to come back,” said Kevin Rathbun, chef and co-owner of the upscale Rathbun’s, Krog Bar and Kevin Rathbun Steak restaurants in midtown Atlanta. “I’m starting to see an upward trend as opposed to downward. 2009 was a rough year, but we’re starting to move in the right direction.”

The return of private parties and conventions

Rathbun said he is seeing more customers frequenting his restaurants in Atlanta for special occasions as well as business meals.

“We’re seeing some private parties come back, and a lot of pharmaceutical companies are coming back into play; that’s helped us," he said. "Also, conventions are starting to play a big part. A lot of them canceled in 2009, but they’re starting to [return now] It’s looking even better for 2011.”

Robby Kukler, a partner at Atlanta’s Fifth Group Restaurants, which operates such upscale establishments as South City Kitchen, La Tavola and Ecco, said he expect 2010 to end on a strong note, thanks to the upcoming holiday season.

“For us, my gut feeling is that holiday dining and group dining is going to be pretty good,” Kukler said. “This year, I think, there is some pent-up demand for those corporations who maybe haven’t done anything for the last two years and to go a third year might be a long time."

However, he noted that company holiday parties likely will not be as lavish as the affairs held before the recession hit.

"Corporate clients will want more for their money so events won’t be as extravagant as they had [been] in the past," Kukler said. "There might be a large number of attendees, but maybe they won’t be as overdone in terms of ingredients or décor or the amount of beverage served.”

Alcohol and appetizer sales up

Kukler said his restaurants are starting to experience an uptick in check averages as customers order more drinks and appetizers.

“We have seen that coming back to being more like it was prior to the recession,” he said. “But people are still looking for value and are really thinking about what they’re ordering. They’re making sure its something they will enjoy.”

Kukler noted that wine sales are back up at some restaurants, and that a growing interest in mixology is driving cocktails orders.

“Really, there has been an ongoing increase in spirits and cocktails that is due to the continued growth in mixology and [the creation of] interesting cocktails," he said. "We’ve seen that happen at all of our concepts where we previously had seen dips during the past 12 to 18 months.”

Value remains key

More casual restaurants in Atlanta also are seeing improving sales trends as residents continue to seek value.

At J. Christopher’s, a 22-unit family-dining chain that specializes in breakfast and lunch, sales are up 1 percent over last year, said Dick Holbrook, the company’s president and chief executive.

“I think people see us, with our average per-person check of about $10, as still affordable,” Holbrook said. “We don’t do liquor, appetizers or dessert; we’re basically a beverage and an entrée so they know what they’re going to spend.”

Reginald Washington, a partner in Lush Life Group, which owns such concepts as Rolling Bones Premium Pit BBQ, said focusing on value is key to succeeding in a tough operating environment.

“People really are conscious of how much money they are spending,” Washington said, “and they’re really thinking about where and how they’re going to spend it."

Value is more than just price, said Bob Campbell, co-founder and chief executive of Tappan Street Restaurant Group, parent company of the 27-unit Taco Mac casual-dining chain. Customers expect to get their money's worth, regardless of how much they spend, he said.

“If they feel they’ve gotten bang for their buck, they’ll be happy at any price level,” Campbell said.

Karen Bremer, executive director of the Georgia Restaurant Association, agreed saying, “Restaurateurs that operate consistently and provide consistent value to their customers are doing and will continue to do well. This restaurant industry is slowly but surely coming back.”

Health care costs looming

While many Atlanta operators are optimistic about the rest of 2010 and next year, they fear implementation of the health care reform bill will erode their profits with increased labor costs.

MORE: Anxiety grows over health care reform [3]

Holbrook of J. Christopher's said he expects costs to increase for both businesses and consumers as a result.

“I think the overall thing that’s misunderstood by Congress and most Americans is that if you impose health insurance on us as restaurateurs, as business people, we are going to turn around and pass it along to you as a guest in the price of our food,” he said. “There’s this misconception that it’s going to be free. Well, there’s nothing for free and … we’re going to see the cost of everything we buy and consume go up. We need to be realistic about that because our margins have been pinched."

Holbrook noted that many in the restaurant industry think health insurance should be provided to employees, but in a more cost-effective way.

“I think we come across sometimes like we do on minimum wage — as not caring, but we are a caring group,” Holbrook said. “We’re in the people business so finding the right ways to provide our employees with insurance certainly would be on our agenda but we have to do that in a way that’s realistic from a financial standpoint.”

Contact Elissa Elan at [email protected]