Leading LR restaurants plate up value, service
Posted: May 19, 2013 at 3:19 a.m.
Two of Little Rock’s most popular restaurants are practically next-door neighbors.
Cheddar’s Casual Cafe of 400 S. University Ave. and Chick-Fil-A at 6201 W. Markham St. collected more taxable revenue in 2012 than nearly 850 other Little Rock restaurants, according to a report from the Little Rock Convention and Visitors Bureau. Only Host International, which operates the restaurants at Bill and Hillary Clinton National Airport/Adams Field, and reports as one unit, surpassed the totals of the two midtown restaurants.
“It is a nice sit-down restaurant, but it is not high priced and it’s family friendly,” said Gretchen Hall, chief executive officer of the bureau, regarding Cheddar’s. “People want to try something new.”
Cheddar’s, which opened in October 2011 in the Park Avenue development, took in $4.75 million in 2012.
Chick-Fil-A represents a different sort of business. John Spenst, owner and operator of the franchise, said two-thirds of his customers go through the drive-through and many customers who come inside order take-out. He only has a short time to impress the 1,800 customers who come to the restaurant each day.
“We stand apart in how we try to serve guests,” he said. “I really do believe that’s what makes Chick-Fil-A different.”
Throughout Little Rock, Chick-Fil-A restaurants reported an average taxable revenue of $2.5 million per store in 2012, higher than any other fast-food chain in the city. Spenst’s store alone generated $4.3 million in taxable revenue in 2012.
“Over the course of the last few years in particular, many of our competitors have seen that there are opportunities [in midtown],” Spenst said. “We’re not quite at the place where midtown is the restaurant destination, but I think it’s heading that way.”
Chain restaurant locations such as Chick-Fil-A, Olive Garden, Red Lobster, Copeland’s of New Orleans, McDonald’s and Texas Roadhouse topped the list in taxable revenue collection among Little Rock restaurants.
“Chain restaurants have an advantage because of purchasing in volume,” said Montine McNulty, executive director of the Arkansas Hospitality Association. “Just by the nature, sometimes it’s difficult to compete with the national marketing and other advantages.”
The top independent restaurant, Big Orange Burgers, generated $2.6 million in 2012. Twenty-one chain restaurant locations separate it and Cheddar’s on the revenue list.
“They’re all really high volume, value restaurants. We’re more gourmet value,” said Scott McGehee, proprietor. “For us to compete with the Cheddar’s of the world, we have to do everything we can to be really efficient and consider everything to keep our prices down-to-earth.”
McGehee, who also partially owns two other independent restaurants, ZaZa and Local Lime, said he hopes to capitalize on Big Orange’s success with a new location in midtown featuring more seating and a larger bar. He said it will open between July 7 and 14 near the intersection of South University Avenue and West Markham Street.
As a whole, Little Rock restaurants took in about $475 million in 2012, according to figures supplied by the bureau. Sit-down restaurants collected 58 percent of that total, compared to fast food’s 32 percent. Average revenue for the city’s about 440 sit-down restaurants was $618,000 compared to $960,000 for the city’s nearly 160 fast-food restaurants.
Concessionaires, caterers and private clubs accounted for most of the remaining 10 percent. Food trucks accounted for less than half of 1 percent.
“Food trucks are a trend all over the country, but I haven’t heard as much about them lately,” McNulty said. “Interest seems to have leveled off.”
With all sales taxes combined, restaurants in Little Rock add a total of 10.5 percent in state, city and county taxes to food bills, including a 2 percent advertising and promotions tax commonly referred to as the “hamburger tax.”
In 2012, restaurants paid $9.2 million collected through the 2 percent tax. The majority of the money is used to repay bonds used to pay for the original Statehouse Convention Center. The remaining funds from taxes cover the operations of the Convention and Visitors Bureau, including marketing for the city and upkeep of city-owned property like the Ottenheimer Market Hall in the River Market, Robinson Center and other facilities.
The recession coupled with high food prices dealt the restaurant industry a blow over the past few years. Hall said the effect was pronounced for higher-end restaurants, but with overall revenue up about 2 percent this year, she hoped the situation was improving.
“I think high-end restaurants are starting to come out of the recession,” she said. “They suffered far more than fast food.”
McGehee and Spenst said the value their restaurants provide customers allowed them to thrive in a difficult time.
“People still wanted those experiences during the recession, they just didn’t want to spend money on them,” Mc-Gehee said. “I don’t think that’s going to change anytime soon.”
Spenst said his Chick-Fil-A franchise was typically positioned third behind Red Lobster and Olive Garden in total receipts until 2011 when it came out ahead.
“If people are used to going out, but want to save money, they can come here,” he said. “As the economy improves, we now have the opportunity to serve people who want to go out to eat again.”
Business, Pages 63 on 05/19/2013