Thursday, January 01, 2004
Copyright © Las Vegas Review-Journal

Restaurant figures likely to sizzle

Nevada expected to lead nation in eatery sales growth percentage in 2004

Paula Baldi works at Memphis Championship Barbecue. Nevada is seen to lead the nation in

Is the best path to a job market recovery through Americans' stomachs? Economists wonder.

Although the U.S. employment fell 0.2 percent in 2003, employment at restaurants, defined by the Bureau of Labor Statistics as eating-and-drinking establishments, rose 1.2 percent, the National Restaurant Association reports.

And, in a front-page story early last month, The New York Times reported, citing Bureau of Labor Statistics data, that the restaurant industry accounted for 18.12 percent of the 293,000 jobs created in the U.S. economy since August.

In its annual industry forecast released Dec. 15, the National Restaurant Association projected U.S. restaurants will employ 12 million people in 2004 and hit $440.1 billion in sales, up from up from $421.6 billion a year earlier. In all, the association estimates, restaurant sales will represent 4 percent of the national gross domestic product.

Some Southern Nevada restaurateurs say they've been adding jobs, many say business has increased lately as consumer confidence improved. And, the good times may continue. The Association, a Washington, D.C.-based nonprofit trade group, projects Nevada will lead the nation in the percentage of restaurant sales growth in 2004.

Economists say it's unclear whether the spate of restaurant hires, which are generally for low pay, mean other sectors with higher-paid work forces will also soon add jobs.

Carlos Silva, operations director for Memphis Championship Barbecue, said sales at his company's three local restaurants are up between 10 percent and 15 percent from a year ago. Business has gone so well, the company recently doubled seating capacity at its restaurant at Las Vegas Boulevard and Craig Road, adding 18 new workers.

"We've been hiring new servers and hosts to help us meet demand," Silva said. "And we just bought a building off Rainbow (Boulevard) and Del Rey (Avenue) for a new restaurant we plan to open in April. We'll be hiring 80 more people for that."

Jim Stubler, general manager for Hot Rod Grille in Las Vegas, like Silva, reported strong business. He figured December sales are up between 13 percent and 15 percent from a month earlier, boosted by rentals of the restaurant's banquet hall for company Christmas parties.

He said even when he hasn't any job openings, he still takes applicants, because staff turns over.

"Hiring is our industry is always perpetual," he said. "We're always trading people in and out. I'm always taking applications."

Van Heffner, president of the Nevada Restaurant Association, said strong business is combining with strong restaurant growth to drive hiring. Southern Nevada, he said, is adding two restaurants a week, which will yield an annual addition of 100.

The National Restaurant Association projects Nevada sales will jump 6.8 percent to $3.57 billion from $3.34 billion in 2004.

And 10-year projections by the Department of Employment, Training and Rehabilitation's Research & Analysis Bureau show food preparation and serving ranks second among all occupations in total projected annual openings with 8,984 for 2000 to 2010. Food and beverage serving workers rank ninth with 4,207 projected total annual openings for the same 10-year period.

Tracy Clark, senior economist at Bank One's Economic Outlook Center at Arizona State University, said the uptick in restaurant business probably relates to the improving economy.

"This probably represents increased disposable income," Clark said. "When you have more people going into restaurants, it typically means there are more people with jobs, or that those with jobs are getting more money than they used to. People who went without raises may be getting raises again. Or people that went with one income now are back to having two."

Jared Bernstein, a senior economist at the Economic Policy Institute, a Washington, D.C., research group, agreed with Clark that an increase in restaurant sales signals an improving economy. But he wasn't so sure an increase in low-paid restaurant jobs necessarily means higher-paid jobs in other fields will shortly follow.

Many local restaurateurs said low-end pay for nontipped workers generally ranges from $6 to $7 an hour.

"Is this a sign of an improving economy? Yes. Is this a sign that we're out of the woods? No," Bernstein said. "If things in the economy are picking up, then consumers have more money to spend in restaurants, and if they spend more, then restaurateurs have more money to add more part-time help. But taking on a low-wage, part-time restaurant worker is much less of a commitment than taking on a full-time hire in information technology or finance."

Bernstein said despite the apparent strength of restaurant hiring, the overall economy is still slow to add jobs. Bernstein said he believed the so-called jobless recovery was over, but said he and other economists have yet to see the robust hiring they'd expect two years into an economic recovery.

Christopher Thornberg, a senior economist with the University of California, Los Angeles' Andersen Forecast, said restaurant hiring is more a contemporary indicator than a leading indicator.

Restaurant consumption, and hiring, he said, tends to move with the economy, shrinking as the economy contracts and expanding as it grows.

Restaurants have always offered work not only for those with culinary careers, but also stopgap work for people between jobs. Therefore, the industry may now offer hope for some people laid off in other fields awaiting job creation.

"You don't need a college education to wait tables and make a very nice living," said Paul Gordon, senior vice president and director of Las Vegas operations for Ark Restaurants.

Furthermore, National Restaurant Association spokesman Tom Foulkes said, some people may come to restaurant work looking for a stopover but finding something more.

"We like to say the restaurant industry is the cornerstone for career opportunities," he said. "It's a wonderful place for people to start a career. We have many examples of people who started in the dish room and end up in the board room."

TOP PROJECTED RESTAURANT PERCENTAGE SALES GROWTH BY STATE

State	03 sales	04 projected sales	percent increase
Nevada	$3,344,461	$3,571,884	+6.8
Arizona	$5,884,676	$6,267,180	+6.5
Utah	$2,077,919	$2,206,750	+6.2
Colorado	$6.095,818	$6,467,663	+6.1
Georgia	$10,153,616	$10,732,372	+5.7

SOURCE: NATIONAL RESTAURANT ASSOCIATION