The following excerpts are from Jim Funk, president and CEO ofthe Louisiana Restaurant Association who, along with Galatoire'sRestaurant Chief Operating Officer Melvin Rodrigue, gave thefollowing State of the Restaurant Industry to New Orleans CityCouncil this morning:
With more than 2 1/2 years since Hurricane Katrina, the industryhas made significant progress. I'm sure you will agree that the falland winter following Katrina were the most difficult times.
The Louisiana Restaurant Association represents the most famousrestaurants in New Orleans, in addition to quick serviceestablishments, po-boy shops and the smallest neighborhood eateries.The average LRA member has annual sales of $600,000 and employs 25to 30 people on a full- and part-time basis. In reality we are anindustry of small businesses.
One in four Americans start out working in the restaurantindustry where they learn responsibility, how to be at work on time,customer service and interpersonal relations.
Restaurant business is improving in New Orleans, but not at therate we all hoped. There are 1,355, or 72 percent, of thefoodservice establishments open in the city, compared with 1,882 pre-Katrina, which is very good considering 80 percent of the city wasseverely damaged.
It is important to note the recovery of the restaurant industryis continuing to outpace the return of the city's population, whichis 66 percent of the pre-Katrina population. As more and more peoplereturn we will see more restaurants open.
On the national front, the industry is experiencing higher fuelcosts which suppliers pass along to restaurant owners. As projected,fuel costs will continue to climb through the summer.
The National Restaurant Association reported in February thatwholesale food costs increased 7.6 percent during the past year,which is the highest in 27 years.
There is a worker shortage in Louisiana and this is evident bythe unemployment rate -- 3.3 percent -- the lowest in nearly 20years. If you pick up the classifieds section of the newspaper,there is no shortage of jobs available, just people to fill them.
I don't have to tell any of you how important food is to ourculture. If you ask anyone why they live in New Orleans, theyusually start listing things and begin with food. It goes withoutsaying New Orleans is world-famous for our food.
We are blessed with the only true American cuisine in the nation.From Cajun country food to Creole, French, African, Cuban, Spanish,we've definitely got an easily recognizable New Orleans favor.
New Orleanians traditionally eat out more often than almost anyother group of people in any other city in the country. It'svirtually impossible to run a restaurant in this city without agreat local clientele.
Tourism also plays a great role in the success of the restaurantindustry and that is on the rise. The Sugar Bowl, the BCS game,Mardi Gras, the NBA All-Star game have proven we can host,accommodate and secure a multitude of visitors.
Looking forward we have the French Quarter Festival and the Jazzand Heritage Festival, where we host hundreds of thousands ofvisitors. Where our restaurants will really feel the burn is duringthe summer months, when tourism has traditionally been very slow.
There are three very important things as it relates to tourismthat we all need to turn our attention now more than ever.
1) Preserving the French Quarter. We need ensure that the FrenchQuarter's historically integrity is maintained so it will continueto be a good place to live, work and visit.
2) Using the Ernest N. Morial Convetion Center. The city will notcompletely rebound until the Convention Center is completelyutilized. It was the engine that drove the city's economy pre-Katrina.
3) Hospitality industry research should be a major factor in ourrecovery and is in serious need of funding. Reseach will show uswhere we are and what direction we need to go in the future.
Through the UNO Hospitality Research Center, which was creatednearly 10 years ago, we were able to survey our New Orleans memberslast week and the following information will give you some insightin to the challenges affecting the recovery of our industry.
When surveyed 12 percent of our restaurant owners reported anincrease of 5.5 percent in the number of staff they have nowcompared to pre-Katrina; 66.7 percent reported a decrease of 18.6percent while 21.2 percent reported the same number of staff ascompared with pre-Katrina.
Here is the average increases our members are facing nowaccording to the survey:
Insurance 94.7 percent
Labor 30.7 percent
Water 36.6 percent
Electricity 30.8 percent
Gas 30.4 percent
Alcoholic beverages 28.3 percent
Food costs 18.3 percent
No doubt these are extreme increases, especially in the area ofinsurance. The profit margin for a restaurant averages a mere 5percent or less. In spite of these drastic increases, restaurateurssaid they have only raised menu prices by an average of 15.8percent.
Restaurants are less likely to attract customers, especiallycoveted tourists & conventioneers if their establishment is locatedin an area that is perceived to be dangerous.
When members were asked about their perception of crime in NewOrleans, 9.1 percent perceived it is improving; 78.8 percentperceived it is worsening; and 12.1 percent perceived crime wasneither improving nor worsening.
Inflation besets N.O. restaurants
The following excerpts are from Jim Funk, president and CEO ofthe Louisiana Restaurant Association who, along with Galatoire'sRestaurant Chief Operating Officer Melvin Rodrigue, gave thefollowing State of the Restaurant Industry to New Orleans CityCouncil this morning:
With more than 2 1/2 years since Hurricane Katrina, the industryhas made significant progress. I'm sure you will agree that the falland winter following Katrina were the most difficult times.
The Louisiana Restaurant Association represents the most famousrestaurants in New Orleans, in addition to quick serviceestablishments, po-boy shops and the smallest neighborhood eateries.The average LRA member has annual sales of $600,000 and employs 25to 30 people on a full- and part-time basis. In reality we are anindustry of small businesses.
One in four Americans start out working in the restaurantindustry where they learn responsibility, how to be at work on time,customer service and interpersonal relations.
Restaurant business is improving in New Orleans, but not at therate we all hoped. There are 1,355, or 72 percent, of thefoodservice establishments open in the city, compared with 1,882 pre-Katrina, which is very good considering 80 percent of the city wasseverely damaged.
It is important to note the recovery of the restaurant industryis continuing to outpace the return of the city's population, whichis 66 percent of the pre-Katrina population. As more and more peoplereturn we will see more restaurants open.
On the national front, the industry is experiencing higher fuelcosts which suppliers pass along to restaurant owners. As projected,fuel costs will continue to climb through the summer.
The National Restaurant Association reported in February thatwholesale food costs increased 7.6 percent during the past year,which is the highest in 27 years.
There is a worker shortage in Louisiana and this is evident bythe unemployment rate -- 3.3 percent -- the lowest in nearly 20years. If you pick up the classifieds section of the newspaper,there is no shortage of jobs available, just people to fill them.
I don't have to tell any of you how important food is to ourculture. If you ask anyone why they live in New Orleans, theyusually start listing things and begin with food. It goes withoutsaying New Orleans is world-famous for our food.
We are blessed with the only true American cuisine in the nation.From Cajun country food to Creole, French, African, Cuban, Spanish,we've definitely got an easily recognizable New Orleans favor.
New Orleanians traditionally eat out more often than almost anyother group of people in any other city in the country. It'svirtually impossible to run a restaurant in this city without agreat local clientele.
Tourism also plays a great role in the success of the restaurantindustry and that is on the rise. The Sugar Bowl, the BCS game,Mardi Gras, the NBA All-Star game have proven we can host,accommodate and secure a multitude of visitors.
Looking forward we have the French Quarter Festival and the Jazzand Heritage Festival, where we host hundreds of thousands ofvisitors. Where our restaurants will really feel the burn is duringthe summer months, when tourism has traditionally been very slow.
There are three very important things as it relates to tourismthat we all need to turn our attention now more than ever.
1) Preserving the French Quarter. We need ensure that the FrenchQuarter's historically integrity is maintained so it will continueto be a good place to live, work and visit.
2) Using the Ernest N. Morial Convetion Center. The city will notcompletely rebound until the Convention Center is completelyutilized. It was the engine that drove the city's economy pre-Katrina.
3) Hospitality industry research should be a major factor in ourrecovery and is in serious need of funding. Reseach will show uswhere we are and what direction we need to go in the future.
Through the UNO Hospitality Research Center, which was creatednearly 10 years ago, we were able to survey our New Orleans memberslast week and the following information will give you some insightin to the challenges affecting the recovery of our industry.
When surveyed 12 percent of our restaurant owners reported anincrease of 5.5 percent in the number of staff they have nowcompared to pre-Katrina; 66.7 percent reported a decrease of 18.6percent while 21.2 percent reported the same number of staff ascompared with pre-Katrina.
Here is the average increases our members are facing nowaccording to the survey:
Insurance 94.7 percent
Labor 30.7 percent
Water 36.6 percent
Electricity 30.8 percent
Gas 30.4 percent
Alcoholic beverages 28.3 percent
Food costs 18.3 percent
No doubt these are extreme increases, especially in the area ofinsurance. The profit margin for a restaurant averages a mere 5percent or less. In spite of these drastic increases, restaurateurssaid they have only raised menu prices by an average of 15.8percent.
Restaurants are less likely to attract customers, especiallycoveted tourists & conventioneers if their establishment is locatedin an area that is perceived to be dangerous.
When members were asked about their perception of crime in NewOrleans, 9.1 percent perceived it is improving; 78.8 percentperceived it is worsening; and 12.1 percent perceived crime wasneither improving nor worsening.
