After two straight down years, restaurants in the Twin Cities expect business to improve this year, and that will mean sales upticks for produce vendors who sell product to them, said Dan McElroy, executive vice president for the Minnesota Restaurant Association, St. Paul.
“We’re hearing from our members that 2009 was a very bad year and that 2010 improved but was still not to pre-recession levels,” he said. “The trend has been that the number of guests is starting to recover, but average guest check is not. It’s still below previous years.”
For 2011, things appear to be shaping up better, he said.
But, he added, there are some caveats with that outlook.
“People are still concerned about the impact of gas prices on dining-out budgets, but in general, we’re seeing a little more optimism,” McElroy said.
He said the signs of pending improvement are apparent.
“We’ve seen some of our multi-unit members announce new events, which we didn’t see much of in 2009 and 2010,” he said. “There are a couple of national franchise groups that are trying to open locations here. Dickey’s Barbecue (Pit), I think, has maybe 18 units open in maybe a year and a half. As they are everywhere in the country, Five Guys (Burgers and Fries) has opened a number of units here.
“We have two new sandwich chains that are opening a number of stores — Jersey Mike’s (Subs) and Which Wich (Superior Sandwiches). There was just a multi-unit deal signed but no locations announced for Firehouse Subs out of Kansas City. And, as you know, sandwich chains tend to be big users of produce in a Subway trend toward a lot of fixings, so to speak.”
The Minneapolis-St. Paul metropolitan area’s diverse restaurant scene is an asset to potential recovery, McElroy said.
“This is a fairly large and growing metropolitan area, with over 3 million people in the broad metropolitan area, and we have members that range from the least expensive QSRs (quick-service restaurants) to very expensive white-tablecloth restaurants,” he said.
“We’re blessed with a fairly broad range of ethnic restaurants for a variety of reasons, with homegrown chains like Famous Dave’s and Buffalo Wild Wings, to a fairly significant presence of the national groups.
“I suspect we match almost any metropolitan area for diversity, with the exception, perhaps, of some of the really big areas like Chicago or Los Angeles that are even more diverse.”
McElroy estimated there are about 10,000 restaurants in Minnesota.
Produce vendors say they have noticed a dip in foodservice-related receipts during the recession.
“I only know what we’re doing, but I think, overall, foodservice declined some,” said Phillip Brooks, chief executive officer of New Brighton, Minn.-based H. Brooks & Co.
“I don’t think there’s been a tremendous change from a year ago.”
The economy’s effects on foodservice probably vary, said Adam Gamble, general manager of North Country Produce, a subsidiary of Russ Davis Wholesale of Inver Grove Heights, Minn.
“It has affected people at different levels,” Gamble said. “Your restaurants and hotels, there’s obviously been some pressure there. Some chains have suffered or gone away.”
Some of the survivors likely have cut back on purchases, he said.
“There’s some obvious effects on them,” he said. “The trickle-down effect from that, most people who have survived have tried to tighten their belts. Their suppliers and distributors are getting beat up. Growers, shippers, packers, processors are feeling the pressure of ‘aggressive buying,’ as I call it. I’ve seen it at the retail level for your traditional level. Everybody’s beating everybody up trying to get what they can out there.”
Others see potential growth in the foodservice sector.
“We’re dedicating all sorts of new people to that all the time because it’s growing really, really fast from all directions, from schools to caterers to major national operations that we’re partnering with,” said Kevin Hannigan, executive director of operations with J&J Distributing Inc., St. Paul.
Clark Jacobsen, produce salesman for The Restaurant Depot in St. Paul, which distributes mostly to local “mom-and-pop” restaurants, said things seemed to be looking up so far in 2011.
“It’s been pretty good for us, and produce has been pretty good for us.”
The recession did have some effect, though, he said.
“Slow business, of course, but it seems everybody is coming back pretty good,” he said. “I ask everybody how their business is going, and they say they’re doing OK.”