Monday, November 26, 2001
Small towns' big challenge: Find dining
Eateries focus on income, high traffic
By James McNair
The Cincinnati Enquirer
HILLSBORO, Ohio Every time Melody Johnson sees a Red Lobster ad on TV, she visualizes herself at the restaurant with a menu in her hands. But after being attracted by steaming saucers of seafood pasta and grilled fresh fish, Ms. Johnson must contend with an even stronger mental image: That of the hourlong drive over two-lane roads to Red Lobster's nearest restaurant in suburban Cincinnati.
I know a lot of people who drive out of the city just to eat, said Ms. Johnson, a 14-year Hillsboro resident and president of the Highland County Chamber of Commerce.
Growth has brought a lot of franchised dining to Hillsboro in recent years, mostly fast food outlets such as Wendy's, Pizza Hut and Long John Silver's. The town of 6,368 does have its locally owned mainstays including the Chit Chat Restaurant, the Wooden Spoon and the No. 1 China Buffet. But for upscale dining and drinks, residents must endure at least a one-hour drive on U.S. 50 and its many curves, speed limit drops and speed traps.
Countless small towns share Hillsboro's plight. With only 40,875 residents as of the 2000 census, Highland County is too underpopulated and too untraversed to attract the big names in sitdown dining. It rates a Frisch's and a Ponderosa; a Skyline Chili is on its way. But Red Lobster, Bob Evans, Bennigan's, Applebee's and Outback Steakhouse remain beyond the horizon.
The explanation for Hillsboro's isolation from the corridors of casual dining lies in numbers. Or, more precisely, the lack thereof.
It's money that matters
Restaurant chains and their franchisees pore over population counts, traffic counts, income levels and retailing densities before plunging into a market or location. A busy shopping center near an upper middle class suburb often does the trick. So do rural areas that happen to be sliced by an Interstate highway.
In either instance, the decision to build is based on the likelihood that the new site will generate a sizable profit. Locations that are safer bets might cost more money. Borderline locations might be passed over several times before someone gives it a chance.
It is an inexact science, to be sure. Restaurant developers, often mandated by investors or franchisors to expand and improve profit margins, fret constantly over the viability of prospective locations and markets. Losing their shirts is not what they have in mind.
One store could take you down, said Bob Conway Jr., vice president of marketing for The Bistro Group, a Mariemont company that owns 30 T.G.I. Friday's restaurants in Ohio, Kentucky, West Virginia and Pennsylvania.
If you're a mom-and-pop operation, he said, it's going to cost you your home and probably the money of a lot of your relatives.
With the specter of a million-dollar bath looming large, restaurant builders don't open new locations merely to satisfy consumer demand or fill geographic holes. That, of course, isn't what small towns and working-class neighborhoods want to hear.
Hillsboro, for example, has a powerful hankering for the biscuits and gravy and country charm of Bob Evans Restaurant. Ralph Vanzant, the town's safety and service director, said Bob Evans' coming has been rumored for 10 years. To his dismay, Wilmington, Washington Court House and Waverly all boast Bob Evans.
You could campaign there because all the Hillsboro people are there, Mr. Vanzant said.
A meal's appeal
Ms. Johnson, the chamber pres ident, doesn't see any reason why Hillsboro should be deprived of more elegant dining options. She points out that Hillsboro has a regional hospital, a community college, several large factories and a booming retail sector that will soon include a Wal-Mart. Rounding out the town's restaurant offering beyond fast food, she said, shouldn't hurt Hillsboro's small-town appeal.
People tend to relax more around food, Ms. Johnson said. People like to talk about business issues over a good meal, a beer or a glass of wine. The lack of that stifles the ability to do that networking.
On a map, Hillsboro is clearly an economic and political hub, with highways fanning out like spokes in every direction. None of those roads, though, are four-lanes, and Highland County's scattered and self-reliant residents just don't spell opportunity for restaurant companies.
Frisch's, the Walnut Hills-based restaurant chain, owns the Golden Corral franchise in 41 Midwestern cities, including Cincinnati, Cleveland and Louisville. Its smallest markets are Lima and Findlay. Anything smaller isn't of interest, said Craig Maier, the company's president and chief executive.
You make a lot more money with a not significantly greater investment by being in a larger market, Mr. Maier said.
In the Golden Corral system, he said, small markets tend to be developed by single-unit operators.
Small markets are OK for smaller-sized units and if you have changed expectations, Mr. Maier said. But if I've got a guy managing a Golden Corral in Fairfield making $75,000 a year, it's very hard to get him to take a job in Washington Court House where he'd be making $40,000 a year.
It's very hard getting someone to move to a small town, he added. So you're forced to hire locally from a smaller applicant pool. And if the manager's bad, nothing can help the store.
Timing is everything
Bistro Group, the T.G.I. Friday's franchisee, is nearing a saturation point for new restaurants in its bigger markets. Bistro opened a Friday's in one of its smallest markets, Bowling Green, Ky., in October. And on a territorial map that resembles a gerrymandered election district, Huntington, W.Va., Elizabethtown, Ky., and Zanesville are pinned as on-deck candidates.
Spending about $1 million per store on construction and equipment, Bistro is deliberate to a fault in its location assessments. Consequently, it opens only two restaurants a year.
The first thing we look at are the demographics of an area, Mr. Conway said. We look for populations in excess of 100,000 within a five-mile radius. We want the average household income level to be more than $40,000. We prefer white-collar and we prefer a large percentage of the population to have some college.
Bistro also likes to see an average annual income of $15,000 per person in the household, a standard that favors areas with large numbers of well-paid single people, Mr. Conway explained. Proximity to thriving, upscale retail areas in visible, accessible spots is another preference.
Culled from Census Bureau data, traffic counts, aerial photography and intelligence-gathering, Bistro's site research and financial projections wind up in a thick binder. From there, it goes all the way to Dallas for approval by T.G.I. Friday's parent company, Carlson Restaurants.
Being nimble helps. Prime locations can go fast, and competitors can get a head start. The ideal, Mr. Conway said, is to position a restaurant to be the first to pop in consumers' minds.
If you can be number one, you're in the driver's seat, he said.
Bob Evans would surely be number one in the minds of Hillsboro's breakfast crowd. The problem is the size of that crowd. It's too small, said Steve Warehime, Bob Evans' senior vice president of real estate.
All 473 Bob Evans restaurants, in 22 states, are owned by the company. Each restaurant costs about $2 million, Mr. Warehime said, although the company spent less on smaller, hometown restaurants built in the mid-1990s. That was the program that put Bob Evans in Wilmington, Washington Court House and Waverly.
After opening 71 restaurants, Bob Evans terminated the hometown program in 1997. All but four of the smaller units remain open, Mr. Warehime said. Rolling out more didn't make financial sense.
They became very difficult to operate so we ceased building them, he said. You can't build a less-expensive, smaller building and sell the same products with the same quality of service that you deliver in a bigger building. Fortunately for the state of Ohio we hit most of the markets we intended to hit.
Bob Evans still builds its full-sized restaurants in rural areas if they meet the company's population, income and traffic criteria.
We just don't consider small towns today unless they've got an interstate highway system or a major draw of some type, Mr. Warehime said. We need something else to draw people to the area.
Cracker Barrel, for instance, opened a restaurant in Dry Ridge, Ky., a town that has little more to offer than I-75 and the outlet mall where Cracker Barrel is located.
Crushing as being spurned by Bob Evans might be to the people of Hillsboro, the town will cope. Bigger, upscale restaurants will eventually hit the small-town circuit as they play out the McDonaldization of Society, a term put forth in George Ritzer's 1996 book about the march of standardization and predictability in life today. It just might not happen for 10 or 20 years.
Theodore C. Wagenaar, a sociology professor at Miami University, said the lack of big-city amenities poses no problem at all to many people in small towns.
People will go to the big city to get a meal, see a movie and go shopping, but they want to live in the small town, he said. They don't want it invaded by all the stuff that's in the big city.
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